Comment: Why Wal-Mart is key to iPhone domination

The significance of the iPhone being sold at Wal*Mart is somewhat overstated: Cell phones, as many of the comments have already pointed out, have been sold in Wal*Mart as well as other big box stores, electronics stores, and so on, including even supermarkets, for awhile now.
The irony of the iPhone vs. the iPhone marketing hype is that it IS a game-changer, but to truly change the game Apple would have to let go of a portion of the pie that it is quite happily eating: Carrier subsidies. The iPhone has the ability, because of a good interface, music, movies, and games that just work, and work properly, and the fact that it is, at heart, an iPod, one of the most successful consumer product of the last decade, to stand on it's own, without the need for carrier subsidies. If Apple just sold them unlocked to whoever wanted to buy them, people would in all likelihood buy them at full price. However, what apple has done instead is to go to carriers and say "you won't have to subsidise this very much, and it will bring new customers in. All you have to do is give us what you would have subsidised it for, or an equivalent in usage charges, and it is yours." This is the same 'ol, same 'ol, but Apple saw a way to make a buck, and that was it. Fair enough, and a nice indicator that Apple, despite their carefully groomed rebel image, are really about making money.
However, getting people to buy a phone at full price was within their grasp, and would have actually greatly strengthened their hand: Anyone, on any network (that supports GSM or UMTS) could buy one without worrying about a new contract. Carriers would be over the moon, as handset subsidies are now one the biggest costs, and would likely fall all over themselves to support their customers who were buying their own phone. Long-term, that is game changing.
Instead, Apple is playing the same as every other carrier: Selling a phone for a mere $3 less at Wal*Mart, which still requires a contract, is locked to a network. The only thing they are changing is the way they are able to profit while most handset makers, because of their own poor interfaces, buggy software, and the way they are beholden to mobile carriers, are in dire straits. Sony-Ericcson may split up, Siemens is gone, Motorola is in big trouble, and most are hurting. RIM is hurting less than some, and actually also has a different business model to most, since it sells it's e-mail services as part of it's hardware offering.
The thing I find interesting is that in MP3 players still no one touches the iPod, both in terms of sales, but also in terms of the overall experience. They have had years, and yet...
If the same plays out in the mobile phone market, that would be a game-changer. But Apple seems unwilling to do what it did in the MP3 market, which is to create a marketplace (iTunes store) in order to sell it's hardware. They don't make a significant amount of money selling songs, but they do make a very significant amount selling iPods.
Back to the mobile phone world, Apple has been greedy, trying to profit beyond hardware sales. Will they likely come out ahead? Maybe. But even if they do, they will be at the top of a heap of sh*t, a seriously flawed market, that they had the chance to change and didn't.

Link to original story that I commented on: http://news.cnet.com/8301-13506_3-10129108-17.html?tag=mncol;txt