• by Laurie Sullivan  @lauriesullivan, August 6, 2007

The 99¢ Only Stores launched a promotion over the weekend to give a few lucky consumers the chance to purchase a 4GB Apple iPhone for $0.99.

The first nine consumers in line on Thursday (Aug. 9--get it?), at the company's original store in Westchester, a community in Los Angeles, will have an opportunity to purchase one phone. The 10,000-square-foot store at 6854 La Tijera Blvd. also plans to offer customers No. 10 through 108 the chance to purchase a scooter for the same price, $0.99.

The promotion celebrates the company's 25th anniversary at the first store. "We want to reinforce the fact that people know everything in the story is only ninety-nine cents, including iPhones" says Diana De Loza, marketing manager at the 99¢ Only Stores. "The iPhone is the newest thing on the market, and people are talking about it. It's a way to thank our customers."

The 99¢ Only Stores plans to run several 10- to-15-second "metro traffic spots" on several Los Angeles radio stations beginning Saturday to promote the iPhone sale and the celebration of the first store's twenty-fifth anniversary. The company will also distribute about 250,000 four-page color flyers around local neighborhoods, and include a mention in the regular Tuesday print ads in the Los Angeles Times.

It's not the first time the 99¢ Only Stores has sold Apple gadgets for $0.99 to promote the store. The company has sold multiple iPod Nanos for that price.

Henry Miller, office services manager at 99¢ Only Stores, expects that between 300 and 400 people will be in line by the time the store opens at 7:30 in the morning. "On opening day twenty-five years ago, we gave away 19-inch black-and-white TVs for $0.99," he says. "Color TVs followed sometime later, along with Tickle Me Elmo."

Dave Gold, 99¢ Only Stores founder, and wife Sherry Gold, along with the store's first customer and employees who have been with the company since 1982, plan to greet and meet people. Invitees to the event include California Gov. Arnold Schwarzenegger, Los Angeles Mayor Antonio Villaraigosa and actress Tyra Banks.

"By selling the iPhone for $0.99, the 99¢ Only Store is taking a marketing ride on the coolness factor," says Trip Chowdhry, senior software analyst at Global Equities Research. "Their customers might not be able to afford the $400 to $600 it would cost to buy the phone retail, but they can certainly afford the $40- to-$60-per-month AT&T subscriber fee."

Shannon Cross, an industry analyst at Cross Research, agrees the iPhone news from the 99¢ Only Stores should draw consumers in, adding that the company will consider the price of the phone a marketing cost for the store. "It shows the appeal of the iPhone, and that it's enough to draw people in," she adds.

Apple CEO Steve Jobs forecast the company will sell more than 1 million iPhones by the end of September, and projects 10 million by the end of 2008. The company says it sold 270,000 in the first day and a half, although AT&T reported only 146,000 activated.

In July, Apple reported third-quarter revenue of $5.41 billion, up from $4.4 billion during the year-ago period. ABI Research estimates the smartphone market segment will grow from 218 million units in 2007 to 426 million units in 2012.