Florian Mueller On Walmart iPhone Sales

17 December 2012

FOSSpatents, Twitter:

The assumption of Walmart just paying for that discount is unrealistic. There’s a partnership with Apple. Price will go down elsewhere, too.

In another tweet, Mueller says that “there is a demand problem”, with the implication that Apple is forgoing profitability to sustain iPhone sales.

This is not true. There is a relationship between Apple and Walmart to enable the sizeable price cuts ($50 off an iPhone 5, for instance), but Apple isn’t sacrificing its margins.

The only agreement in place is that Apple has allowed Walmart to sell the iPhone at a discounted price. The reduction comes at the expense of Walmart’s margins, however. Walmart is the one who is losing money. Apple continues to sell the iPhone to Walmart at the same price as anyone else; their ASP is unaffected by this arrangement and remains as stable as ever.