Apple (AAPL) plans to sell its new iPhone 4 model at Wal-Mart retail stores on June 24, marking the earliest after a product launch that a PC or phone maker has graced the aisles of the mega-chain with a hot new gadget.
And talk about a huge win for Apple's distribution efforts: With this announcement, Apple is putting what may be its hottest product ever in potentially thousands of additional retail stores simultaneously. Today, the smartphone is ascendant, Wal-Mart (WMT) is Middle America, and Apple is omnipresent.
Android Is Also Gaining Ground
This is not to say that Android, a competing smartphone operating system designed by Google (GOOG) isn't gaining ground. Phones running the Android mobile OS are gobbling up market share and have already surpassed the iPhone in terms of total data consumption on smartphone platforms. Android phones are have been for sale at Wal-Mart for two years, thanks to the store's relationships with mobile phone carriers.
Apple phones have been selling in Wal-Mart for some time, as well, but Apple often restricts distribution for awhile on hot new products before cutting deals to allow broader mass market exposure at large retailers. Not anymore -- the new iPhone 4 is going straight to Wal-Mart the same day it will be released at Apple Stores.
Why Wal-Mart would want the iPhone is obvious. Apple probably doesn't give out great margins to distribution partners, but iPhone customers load up on accessory purchases such as cases and spare external batteries. These accessories are wildly profitable, both for the manufacturer and for the retailers. At the same time, Wal-Mart has been trying to swim upstream to reach higher-demographic customers in an effort to boost profit margins and sales per customer. While Apple isn't exclusively upmarket anymore, an iPhone is the type of high-dollar purchase item that Wal-Mart covets.
Smart Move by Apple
For Apple, getting the iPhone 4 featured inside the House that Sam Built is an incredible coup. The largest retailer in the world, by its sheer ubiquity and size, can alter personal electronics market share tallies for brands with a single purchase order. In fact, much of the meteoric rise of flat-screen television giant Vizio has come through its sales at Wal-Mart, which is now, by a good margin, the largest retailer of big screen tubes in the land.
Apple has been ordering up parts needed to produce iPhones at a rate of roughly 3 million per month. That's incredibly fast and speaks volumes about Apple's own predictions for sales of its new gadget. Without a doubt, the smartphone wars are heating up and Apple is looking to get as many of the new phones out and about possible -- pronto.
Take the first steps to building your portfolio.View Course »