Walmart has announced that starting January 11 it will sell both the iPhone 4 and 5 unlocked and without a service contract. The catch is: it will cost you the full amount for the devices, $449 for the iPhone 4, $649 for the iPhone 5. These prices come without the normal carrier discounts.
The retailer will offer its Straight Talk monthly service plan for $45…users who purchase phones with a Walmart credit card will be charged $25 monthly. The plan provides unlimited talk, text and data usage.
The announcement came as the 2013 Consumer Electronics Show is being held in Las Vegas.
In nearly every country where the iPhone models are sold, the consumer pays full price for an unlocked phone, and then shops the different cellular providers for the best deal. In the US, however, it’s backwards–the consumer first selects the carrier he or she wants, then typically visits that company’s store to purchase the device at a substantial discount. Presently that’s about $199 for the iPhone 5 most places, while the iPhone 4 is being offered either for free or almost free (AT&T has it for 99 cents) when the user signs a two-year contract. The carrier is able to offset the money it loses up front on the phone’s smaller cost with the 24 month service plan.
And there’s the rub: in most cases it’s actually less expensive to buy the phone outright for full price and pay a smaller monthly service fee with service providers like Cricket (and now Walmart) that offer the option, than to pay the lesser amount up front and much higher service fees per month with AT&T, Verizon and Sprint. Considering that the contracts are almost always for 24 months, there’s no way to back out (except in extreme cases) without facing a huge Early Termination Fee that’s often more expensive than the phone was in the first place.
Sprint is presently the only one of the three major US carriers that offers unlimited talk, text and data usage.
Unlocked iPhones–and smart phones in general–are nothing new. When the first iPhone went on sale, many purchased the unlocked version (as there was little cost incentive against it) in order to run software that was not approved by Apple, which only allows apps it approves to run on it. This process was called “jailbreaking.” At the time AT&T was the only carrier for the device, and stories were common of iPhones being “bricked”–a security patch sent from Apple would affect its electronics and would permanently shut down the jailbroken phone.
Android gained popularity because it was touted as an “open” platform…the difficulty has been that with no “watchdog” to curate the apps, many have been found to contain viruses or malware.
The full Walmart story can be found on PCMag.com‘s site.