In a bid to boost sales of its latest iPhone 5 smartphones and catalyze current customers to upgrade their handsets, Apple intends to start a trade-in program in retail stores, according to a media report. The move will not only help Apple to boost sales in the U.S., but will also provide Apple additional low-cost hardware to sell in emerging markets.
When Apple released first three or four generations of iPhones, it was pretty sure that a significant amount of buyers will upgrade their smartphones after a year or two of usage. However, as the popularity of the iPhone increased dramatically in 2010 – 2013, smaller percentage of customers upgraded their phones after a year or two. Moreover, absence of breakthrough new features also slow-downed the upgrades. As a result, Apple needs to catalyze its existing customers in the U.S. to buy newer iPhone models, but without lowering prices of its products.
As a result, Apple decided to trade-in older iPhones and sell newer models at discounts. Apple has teamed up with Brightstar Corp., a mobile-phone distributor, to run the exchange program, reports Bloomberg news-agency. Brightstar also handles trade-ins for AT&T and T-Mobile US, as well as other carriers and device makers.
“This will help them sell more phones, because it will lower the consumer’s out-of-pocket expense,” said Roger Entner, an analyst at Recon Analytics LLC.
By trading-in older iPhones, Apple solves two tasks: it sells the latest technology to customers in the U.S. and gets cheap hardware to sell in the emerging markets. The company needs affordable smartphones to popularize iOS and Apple eco-system in general in developing countries, but it has been reluctant develop inexpensive models to address those markets.
Apple currently has a Web-based recycling service, in a partnership with PowerOn Services, offering to pay people for their used iPhones, iPads or Macs. Apple collects 80% of its used devices in the U.S., and resells most of them through distribution centers in 50 countries. The retail program will let Apple to buy back even more hardware.