The Walmart iPhone price drop probably signals the imminent release of Apple's new model, maybe as early as June 7.
The retail giant did the same thing with the iPhone 3G in 2009 to clear out inventory before introducing the then-new iPhone 3G S.
Analysts had predicted such a price drop after Apple's introduction of the new version (dubbed iPhone 4G, which was infamously forgotten at a Redwood City bar in April). By giving itself a head start, Wal-Mart hopes to capitalize on a surge in sales.
So should you buy cheap – or wait for newer technology?
The discounted iPhone will probably draw consumers looking for a bargain who don’t mind not having the latest iPhone technology.
If you're trying to decide whether to jump on the deal or wait to see what's unveiled on June 7, you might want to consider these factors:
Does the price drop mean significant revenue decreases for Apple? Probably not.
The iPhone 3G S costs about $179 to produce (at least it did when the model was released last summer). But even if Apple loses money on the older models, buyers are required to sign a two-year contract to get the discounted iPhone 3G S, which includes a $30 obligatory monthly "data charge." Apple will continue to reap revenues from those contracts. [Editors note: This paragraph was changed to reflect that Apple receives a portion of these revenues, not necessarily the full amount.]