$99 iPhone Rumors Confirm That Wal-Mart Sets The Holiday Pace

(MoneyWatch)  Rumors of a $99 iPhone coming to Wal-Mart may or may not be true, but they are evidence that the company sets low prices in holiday retailing even when it isn't selling the goods involved. Even if the $99 iPhone never actually materializes, it seems certain that Wal-Mart will announce a deal with Apple to sell some version of the device just after the holidays.

Still, a $99 Wal-Mart iPhone would follow a pattern. Last year, Wal-Mart introduced a $99 HD DVD player that realigned prices and consumer expectations for the devices across retailing. Wal-Mart's strategy for the holidays is clear: It centers on making timely pricing announcements that establish just what the most bargain-conscious consumer can expect to pay.

As iPhone rumors swirled, Wal-Mart announced it was releasing "tens of thousands" of Nintendo Wii consoles for sale on its website at $249.24. The Wii price beat Bestbuy.com's offer by 75 cents and solidifies Wal-Mart's position as the bargain bottom for the product in online comparisons. Toys 'R Us, by the way, didn't even have Wii consoles available on its web site as of yesterday.

Wal-Mart's timing is significant, as the company waited far enough into the holiday season that Wiis had been frequently priced and those prices widely discussed. So Wal-Mart can make a price splash, get traffic based on the desperation of parents who are frantic to find that item at an affordable price and make a few bucks -- probably more than Best Buy -- on the item.

Ultimately, Wal-Mart and Apple are good partners, at least in regards to the iPhone. Despite flashy challengers, they represent a standard against which others are judged, whether in terms of sales or features. Even if only the 2G model, a $99 iPhone would fit into Wal-Mart's holiday strategy, making new BlackBerry devices -- which are two or even three times more expensive -- seem downright indulgent in this frugal holiday season.