Why did Walmart reduce its prices for Apple’s iPhone?

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Walmart slashes prices for the iPhone 5S and iPhone 5C

Walmart (WMT) has reduced its prices for Apple’s (AAPL) iPhone 5S and iPhone 5C models ahead of the impending iPhone 6 launch. As the chart below shows, Wal-Mart has reduced its store prices for the iPhone 5S from $149 to $99. It’s also dropped its iPhone 5C prices from $49 to $29. This deal will only be valid with a two-year contract with either Verizon (VZ), AT&T (T), or Sprint (S). Consumers can purchase these phones from Wal-Mart’s retail stores and not online.

Let’s find out what prompted this move.

Apple iPhone price cuts

Apple needs to sell older models before launching new models

This isn’t the first time Apple has taken this kind of step. When you consider that we’re nearing the launch of a new iPhone model, this isn’t too surprising. Last year, Apple also drastically reduced the prices of its iPhone 5 ahead of the iPhone 5S and iPhone 5C launch.

This time, the iPhone 6 is expected to come out in September this year. This means Apple needs to clear its inventories of older models as soon as possible. The price cuts are an easier way of clearing inventories. That’s why Apple is dropping prices.

The iPhone 6 is expected to offer some advanced features

Analysts widely expect Apple to launch two models of the iPhone 6 in different screen sizes—4.7 inches and 5.5 inches. Until now, Apple has developed iPhone models with screens of less than four inches. This will be the first time the company develops larger iPhone models.

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Developing a larger-screen-size model is important for Apple. According to a survey by RBC Capital Markets and as reported by AppleInsider, 65% of people would consider buying an iPhone if Apple offered a larger screen. According to the same survey, a surprising 33% of respondents mentioned that the iPhone’s smaller screen size is what stops them from buying the iPhone.

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