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All signs point to a new iPhone as being just around the corner. The latest one comes from retailers: Best Buy(s BBY) and Target(s TGT) are dropping the price of iPhone(s AAPL) models, according to AllThingsD. Target is now selling the 16GB iPhone 4S for $179 with contract (a $20 price cut) and Best Buy is selling the older 8GB iPhone 4 for $49 with contract ($50 off). This follows Sprint’s (s S) move last week to drop the iPhone 4S to $149 with contract.
Now, it’s not particularly newsworthy that national retailers are offering a discount to make a sale. Nor is it unusual that they’d do it knowing (or making an educated guess) that a new model is going to replace the units filling up their store shelves their backrooms in September or October.
What is interesting, however, is that Apple has been reportedly joining in by quietly matching competitors’ iPhone discounts in its stores, as MacRumors reported last week. It’s noteworthy because Apple doesn’t follow the typical retail playbook and do price-slashing sales. The premise of the Apple Store is that it is a showroom for its premium devices. It is not known as a place to go bargain hunting. Sure, once a year it offers a minor Black Friday discount on some products, and throughout the year it does offer reduced prices on refurbished items, but that’s online and not in stores.
It’s clear why Sprint or Target would try to boost sales with discounts to clear out inventory on an iPhone 4S that will in all likelihood be reduced to $99 on contract come October. So why would Apple concern itself and its premium brand with matching prices? Maybe to avoid a quarter like the one it just had, and the earnings it reported in October last year — quarters where it has reported incredible profits along with reduced iPhone unit sales. Investors freak out when that happens, and it moves Apple executives to publicly pin the blame on “rumors and speculation” regarding a new iPhone.
But by matching Sprint’s discounts, Apple is playing into the rumor cycle too, and strongly hints that a new device is on its way. It also encourages other retailers to join in, as Target and Best Buy have this week.