5 Reasons Why The $99 4GB Walmart iPhone Will Be A Dud (if it's launched)

US Giant Walmart is set to sell Apple's iPhone imminently according to various sources. The phone will apparently be on sale at the world's largest retail store and chances are that it could be a $99 model and would almost certainly push for broader adoption while sacrificing a few things.

Here are five reasons why the entry-level iPhone won't be as successful as Apple will like it to be - if ever it is released.

(1) $99 with no strings attached?

Prospective customers will still need to buy the phone with a two year contract from AT&T. AT&T Nation plan cheapest tariff costs $75; that's 450 anytime any network, 5000 night and weekend minutes and 200 texts for the user. That's $1800 for the duration of the contract.

(2) Will it really matter?

As demonstrated above, there's only $100 difference between a prospective $99 lower specced model and the 8GB version. That's a tiny fraction when spread over the length of the contract. It would in effect be less taxing for cash-strapped consumers if AT&T and Apple decide to spread the cost of the iPhone over 24 months. At the end of the day, the cost of the contract, not that of the phone will be the deciding factor.

(3) What corners will be cut?

Apple will have to make some concessions if it is to sell a cheaper iPhone so as (a) no to cannibalise any sales of its higher end iPhones (b) not to have a customer backlash if the lower end iPhones is perceived to have better value for money. So what corners could be cut? Well, Apple could very easily bring out the original 4GB version, without 3G, without GPS and possibly with a less classy material. But can Apple actually afford to specced down the iPhone when facing stiff competition.

(4) The competition

A 4GB iPhone suffers from competition not only from other manufacturers but also from Apple's own iPod Touch. Apps like the Truphone means that the iPod can now be used as a PAYG phone without any contract and at an unbeatable price. By the beginning of next year, smartphones like the Samsung Tocco will have fallen down in price and a new generation of Android phones will come on the market; all with more memory (and expansion slot), better camera and available on a wider range of contracts.

(5) Too little too late?

Launching a cheaper model right now would not make much sense for Apple though. There's roughly 7 months to the release of the next iPhone, which should be a 32GB model, and would allow Apple to drop the price of the 8GB substantially. A 4GB model could well be a matter of "too little, too late".

Again, we could be wrong and Apple could decide to slash the cost of the current iPhone 3G significantly to boost its marketshare during these times of turmoil. The company can afford to do that as the ARPU (the Average Revenue Per User) is significantly higher for the iPhone.

Put it otherwise, iPhone users spend a lot more than regular smartphone users with a regular stream of Dollars going to iTunes and App Stores. So the Cupertino-based company could take a bet and boosts its userbase by hammering its competitors with an unexpected price cut.

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