Wal-Mart To Sell iPhone 3G Starting Sun At $197

Wal-Mart To Sell iPhone 3G Starting Sun At $197

Of DOW JONES NEWSWIRES

SAN FRANCISCO -(Dow Jones)- Wal-Mart Stores Inc. (WMT) said Friday it will begin selling Apple's (AAPL) iPhone 3G starting Sunday, but not at the dramatic discount some had expected.

The retailer said it would sell the eight-gigabyte iPhone 3G for $197 and the 16 GB model for $297. Prices are for phones with a new two-year service agreement with AT&T (T) or with a qualified upgrade, the retailer said in a brief statement on its Web site.

The prices Wal-Mart announced Friday are in line with iPhone 3G prices elsewhere, which should put to rest rumors the retailer known for selling low- cost items would also be dramatically discounting the iPhone. Some prominent Apple bloggers suggested Wal-Mart would sell the iPhone 3G for as low as $99.

Wal-Mart did leave room for further discounts by promising to match lower iPhone 3G prices available elsewhere. Best Buy Co. Inc. (BBY), the only other U.S. retailer to sell the phone, currently offers the iPhone 3G for just $10 less than Wal-Mart.

A Wal-Mart spokeswoman added the iPhone 3G will be available starting Sunday at 2,493 of Wal-Mart's 3,200 locations, but provided no additional information on the roll-out.

The phones are now available in Apple stores, Best Buy and AT&T. Wireless operators in more than 70 countries also sell the iPhone 3G.

The Wal-Mart deal could significantly increase the number of iPhones sold in the U.S., Piper Jaffray analyst Gene Munster said in a research note written before the deal was announced. In the note, Munster suggests an Apple/Wal-Mart relationship would boost expected overall iPhone sales by 10% next year to nearly 50 million. Munster didn't respond to a comment inquiry Friday.

The news begs a question: Why did the two companies wait to start selling the iPhone 3G Sunday? Had Wal-Mart begun offering the iPhone 3G a few days earlier, the companies could have benefited from the holiday season gift-buying rush. Wal-Mart wasn't commenting beyond its official statement, which doesn't address the question, and spokespeople for Apple and AT&T didn't immediately respond to comment inquiries.

Wal-Mart shares recently lost 25 cents to $55.30; Best Buy shares fell 60 cents to $26.54. Apple was up 74 cents to $85.88, while AT&T shares were up to $ 27.84.

-By Mary Ellen Lloyd, Dow Jones Newswires; 704-948-9145; maryellen.lloyd@ dowjones.com and Ben Charny, Dow Jones Newswires; 415-765-8230; ben.charny@ dowjones.com