UBS on Walmart iPhone

Although the Kaufman Bros. research group has called the prospect of a $99 iPhone "inevitable," such a price is actually unlikely in the near future, according to UBS analyst Maynard Um. Um is in particular responding to a report from the San Jose Mercury News, which cites the possibility of a $99 price and a special 4GB capacity at Walmart. There are several reasons this view should be considered improbable, says Um, beginning with the fact that the Mercury News cites only one Walmart worker as a source for the 4GB phone option.

It is moreover argued that the $99 pricing would be abnormal for Apple, which tends to distinguish itself as a "premium" brand with higher costs. A $149 pricetag would be more plausible for a 4GB phone, Um proposes, and in reality it may be more likely that Apple will simply move the current 8 and 16GB models into Walmart stores, mimicking its strategy with Best Buy.

Um notes that if a 4GB phone were introduced, it would likely boost unit demand, but at least in part at the expense of other iPhones, and potentially the iPod touch. FY09 pro forma EPS could in theory drop by as much as $0.27, though if Apple shipped more than 1.5 million more phones, any losses might be overcome. Sales of the new model would have to expand beyond Walmart, Um writes.

by MacNN Staff