I just lost my cord for my iPhone 5, so I had to get a new one.
I stopped into the neighbourhood Radio Shack on the way back from Chop’t and got one.
I noticed that they were offering “$50 off!” an iPhone 5, so I asked the Radio Shack guy about that. He said that promotion was a Sprint thing.
(I remember a few years ago when Apple never let anyone discount its products or offer rebates. I thought that was a smart strategy, one that reaffirmed the iPhone as a “premium” phone. I’ve noticed with some concern that Apple seems to have abandoned that strategy).
I also asked the Radio Shack guy what kinds of phones people are buying.
He said, “the Samsung Galaxy S3.”
I asked him about the iPhone.
The Radio Shack guy said that they were still selling some iPhones–implying that sales have fallen off–but said the price-point of the Samsung is a big draw right now.
He then explained that Samsung is selling the Galaxy S3, a phone that many people thought was as good as or better than the iPhone 5, for $50 right now (with a contract). And he said lots of folks choose to save the $100-$150 vs. the iPhone 5.
Now, it’s no mystery why Samsung is selling the Galaxy S3 for $50 right now… Because the Galaxy S4 is about to come out.
But it doesn’t matter why Samsung is selling the S3 for $50. What matters is that Samsung is selling the S3 for $50. And at least in the United States, at this particular Radio Shack, the $50 price point is making people opt for the S3 over the much-more-expensive iPhone 5.
That’s bad news for Apple in three ways.
First, it might mean that Apple’s second-calendar-quarter iPhone sales might be getting hammered (we’ll find out when Apple reports earnings).
Second, it might be an indication that price-points for premium top-of-the-line smartphones are starting to break down. Eventually, at some point, these price points probably will break down. And, when they do, Apple’s profit margin will compress.
Third, at least at this Radio Shack, it’s an indication that the Apple iPhone isn’t worth paying more for.
Yes, this is just one Radio Shack in one city in one country. No, we should not extrapolate much from that.
But it’s another discouraging data point ahead of Apple’s big earnings call. (See: “Bracing For Disaster: How Bad Will Apple’s Earnings Be?“)
And I say that as an Apple shareholder!
By the way, the Radio Shack guy said no one is buying the new BlackBerry.
SEE ALSO: The Bull Case For Apple!
Disclosure: Last week, when Apple’s stock crashed to a new low of $390, I bought some. I think stock-picking is an idiotic strategy for individual investors, and I almost never do it. But, sometimes, for fun, I put my money where my mouth is. You can read about the logic behind my Apple purchase here.
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