Best Buy Clears a Spot on Its Shelf for iPhone

Best Buy will sell the phone at the suggested retail price of US$199 for the 8 GB model and $299 for the 16 GB model with the start of a new two-year service contract -- the same prices found at AT&T (NYSE: T) and Apple (Nasdaq: AAPL) retail locations.

The popular device is a welcome addition to the store's lineup, Best Buy spokesperson Jeff Dudash told MacNewsWorld. "We certainly recognize the high level of interest and demand for these products."

Best Buy will receive regular shipments of the device throughout the holiday season, he added, though he declined to provide specifics about inventory levels or expected sales.

While stocking a new product is usually not an indicator of a retailer's overall go-to-market strategy, the iPhone is in a separate case. Up until now, it was only available in Apple and AT&T stores, Dudash noted.

Having the iPhone in-house could further increase the store's street cred with Apple fans, as Best Buy is one of the few big-box electronic retailers that stock Macintosh computers.

Growing Sales

Best Buy's announcement dovetails with a client research note Piper Jaffray analyst Gene Munster has reportedly issued. In it, he re-adjusts his estimated number of iPhones Apple will sell in the fourth quarter from 4.1 million to 4.47 million.

Clearly marketing the iPhone 3G will help Best Buy's momentum, especially since there's still buzz around the device more than a month after its release, IDC Senior Research Analyst Ryan Reith told MacNewsWorld.

"Best Buy is clearly growing, and it will be a larger presence in the United States towards end of this year and in 2009," he said.

Indirect Channel

That said, the iPhone is unlikely to deliver a huge boost to Best Buy's overall retail sales, Reith said. "It is more of an indirect sales channel for Mac products. The majority of iPhone sales will still continue to be made through Apple and AT&T stores."

Estimates for the iPhone 3G's sales volume are still a work in progress, Reith said, noting that a number of analysts have increased their estimates of sales because of initial uptake.

Another indicator is the popularity of the App Store, from which more than 60 million applications have been downloaded since it opened, according to Apple CEO Steve Jobs.

Indeed, the iPhone 3G appears to be following the same trajectory of the original iPhone's initial release last year. "In both cases, Apple sold a huge amount in the first weekend, and sales continued to be strong for several weeks," Reith said. With the first version, sales declined after the iPhone had been on the market and lost some of its brand-new shine.

That will likely happen with the 3G as well, he said.

"Q3 will certainly have extraordinary numbers for them, but there won't be a continuous uptick in sales unless they do a holiday promotion. Then, after the new year, people will look to see what is next."