The Monkey Shack

For months my wife has been counting down until construction on a new WalMart in our town is completed. Not because we are so enthusiastic about the store, I can barely stand going there. But because it means that we no longer will have to drive 30 minutes to go grocery shopping. Yes we live in the middle of nowhere.

But now I have a new reason to be excited about WalMart. According to Bloomberg, WalMart will start selling a $99 4-gigabyte iPhone later this month!

First of all, I love Apple's timing on this. Wait until after Christmas, so that everyone who wanted to buy one as a gift for Christmas will have to go to the Apple Store for the $199 or $299 version. But some brand analysts are wondering what sort of damage offering the iPhone at a discount retailer will do to Apple's overall brand image. After all, if you're a brand with high aspirational appeal such as Apple, do you want your product showcased an aisle away from laundry detergent and 10-packs of boxer shorts? Not to mention it would sit on a shelf next to Google's Android phone, also sold at WalMart.

Apple has built a premium brand that would be difficult to be commoditized by a low price point. Apple also released low-price iPods that have managed to retain their hip quotient despite mass penetration. And going mainstream is exactly what Apple intends to do by placing the iPhone on WalMart's shelves. It also plans to sell the phone at Best Buy.

But is it worth the risk? Why is Apple doing this? I have a couple theories. What drove the popularity of iPods was the iTunes store. The same thing is beginning to happen with the iPhone's app store. But in order for more developers to jump on board and be willing to program new applications, the iPhone universe has to grow. Broader iPhone adoption will be driven by Apple's ability to build a more complete product line with low-end, mid-range and high-end products. But Apple is also likely looking to amp up its distribution while banking on the halo effect of other Apple products. Studies have shown that when people start to use Mac products, they want to connect those devices with a Macintosh computer rather than a Windows-based PC.

I never thought I'd say this, but I can't wait to go to WalMart.