Apple Dips Into Discounting

Apple Store
ADE JOHNSON | Stringer | Getty Images
Apple Store

Apple stores as a discount house? Let’s slow down already. Apple stores are hardly festooned with sale signs, and a New Age Crazy Eddie isn’t shouting about “insane” prices.

That said, discussion over the weekend revolved around this: Apple has quietly told its store workers to match discounts on the iPhone 4 and iPhone 4S from approved major retailers and carriers like Sprint Nextel, which is currently offering a $50 break. Apple won’t offer the discounts automatically; customers have to ask.

In reporting on this turn of events, Investor's Business Daily, The Examiner, PC Magazine, and pretty much everyone else told the same simple tale. Apple is doing it to clear inventory in preparation for the expected release of the iPhone 5 in September.

Fair enough, to a point.

But it’s hard to discount selectively. Granted, if anyone can do it, Apple probably can. But discounting, even for a great high-end retailer — or consumer electronic maker — tends to be a slippery slope. Once customers see a sale, their perceptions and preconceived notions begin to change. They start to expect a sale.

Consumer electronics have always been all about sales — think everyone from Dell to Best Buy to Research In Motion — so it’s not too far out to think that Apple might beat the discount drum one day.

One day. This is nothing that will impact Apple earnings in the next few quarters, so don’t condemn or even judge Apple. But — and the media is not telling you this — keep an eye out for this.

Apple is not going to leave the high-end fold anytime soon. But the snazzy gadget maker’s first foray into discounting is something to watch long term.

Apple is not a discount house, but don’t discount the eventual impact that discounting might have.

—By Contributor Marek Fuchs

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TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks. At the time of publication, Marek Fuchs had no positions in any of the stocks mentioned in this column.