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Why Does Apple Let That Dump Walmart Discount iPhones?

I haven't been able to get a definitive answer, but let's assume (I think safely) these third-party arrangements look like this.

Apple sets a minimum sales price that Walmart and others must abide by. That almost certainly has to be the case. I would hope that Apple also controls the ability for these third parties to discount. In other words, Walmart didn't come up with the idea to sell the new iPhones for $10 less than everybody else (with a two-year contract) on its own. They either came up with it and Apple approved or it was some sort of joint decision. If Walmart has carte blanche to discount, which I doubt they do, we really have problems.

Particulars, however, are irrelevant. No matter how it comes to be, it's bad for Apple. And it's not a numbers thing. Even if Walmart eats that $10 discount, who cares? It's not about the money. In fact, I would be willing to give up the revenue these relationships generate (I haven't seen a reliable breakdown of Apple retail sales via third parties) to protect and rebuild the part of Apple's image that has eroded.

Again, no skirting the issue with euphemisms and niceties.

Fair or not, elitist and snobby or not, Walmart is the butt of too many jokes. There's not a soul in this audience -- or any other for that matter -- who hasn't made a joke about everything from the Walmart experience to some of the people who frequent the place. Walmart has built its brand on being the place to get cheap stuff. Everybody likes a bargain, but Walmart took the notion to an extreme. This is the place people load up on the staples when they get their check at the end of the month. It's well-chronicled in pop culture.

Maybe it's urban myth. I don't know. But, as we discussed earlier this week in Apple Laughs When it Realizes Google Makes Computers, perception equals reality and it is reality.

Why Apple wants to be as close to the bottom of the retail barrel as you can get -- short of selling stuff at a swap meet or flea market -- is beyond me.

--Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a columnist and TheStreet's Director of Social Media. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.
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