Apple ( AAPL) is reportedly opening up another front in its smartphone war by teaming up with Wal-Mart ( WMT) for the holiday season, although rumors of a $99 iPhone may be wide of the mark. The San Jose Mercury News reports, for example, that iPhones could be on sale at Wal-Mart stores by the end of December, and possibly even before Christmas, although pricing is still not known. Bloomberg also reports that Wal-Mart is preparing to sell two versions of the iPhone. The blogosphere has been rife with rumors of a 4GB $99 iPhone, sold via Wal-Mart, during recent weeks, although the MacRumors blog told a different story Monday. "Based on available Wal-Mart training materials and advertising we've received, however, it seems that this rumor is unlikely," it said. "The advertising shown only lists 8-Gbyte iPhones for sale at $197, without any hints of a cheaper model." "The iPhone will go on sale at Wal-Mart beginning on December 28th," it added. At least one analyst was also skeptical about the possibility of Apple and Wal-Mart giving birth to a low-cost smartphone. History has proved that the Apple rumor mill is not always 100% reliable, according to Ramon Llames, senior research analyst at tech research firm IDC. "When the rumors of the first iPhone were surfacing, everyone was wrong," he said, highlighting the myriad form factors and features that Apple was rumored to be planning. Whereas the 8GB version of the iPhone has a starting price of $199, there has been speculation that Apple will sell a discontinued, 4GB iPhone via Wal-Mart. This would enable the company to hit a $99 price point, something that could prove popular in a recessionary climate.
Despite his skepticism, Llames admits that a discount iPhone would have little trouble finding a market. "If a 4-gigabyte iPhone came out priced at $99, then I know a bunch of people that would buy it," he said. Apple did not respond to TheStreet.com's request to confirm a possible Wal-Mart partnership and the launch of a low-cost smartphone. Wal-Mart also refused to be drawn on the possibility of an Apple deal. "We have made no official announcement on offering the iPhone," said a spokeswoman for Wal-Mart. A partnership with Wal-Mart would certainly offer the iPhone a major boost at a time when tech spending is slowing. Apple, like its rival Research In Motion ( RIMM), has also been chipping away at Nokia ( NOK)'s dominance of the smartphone market over recent months. Clearly boosted by the summer launch of the iPhone 3G, Apple's smartphone business is booming. Third-quarter iPhone sales grew more than 327% year over year, according to analyst firm Gartner, while Nokia's fell 3%.
With consumers' budgets tightening, more and more manufacturers are throwing their weight behind low-cost handsets. Palm > ( PALM), for example, staked its claim to the low-end of the smartphone market with the launch of its $99 Centro last year. HTC > ( HTC)also offers its Fuze handset for $149.99. If Apple does clinch a deal with Wal-Mart, it would not be the first time that the Cupertino, Calif.-based firm has used the retail sector to extend its smartphone reach. Best Buy ( BBY), for example, sells a number of Apple's handsets in its stores, priced from $199 for the 8GB iPhone 3G. Smartphones are also part of Wal-Mart's product catalog: the company already sells T-Mobile's ( DT) G1 Smartphone, also known as the Google ( GOOG) Gphone, in its stores. Shares of Apple closed up $5.72, or 6.09%, at $99.72 in Thursday trading, as the Nasdaq rose 4.14%. Wal-Mart's stock slipped 65 cents, or 1.12%, to $57.56 Thursday.