Bloomberg reported on June 7 that technology giant, Apple, is getting ready to launch a trade-in program for the very popular iPhone. The California based maker of consumer electronics and devices is hoping that the new exchange program will help boost the sales of the iPhone 5 as current users will be encouraged to turn in older devices and get the latest product. According to the Bloomberg report, Apple has partnered with mobile-phone distributor, Brightstar Corp, to run the program smoothly. Brightstar has experience in the matter from previous engagements with AT&T and T-Mobile.
Roger Entner, an analyst at Recon Analytics, believes Apple CEO Tim Cook’s exchange program is a good idea and says, “This will help them sell more phones, because it will lower the consumer’s out-of-pocket expense.” However Apple has yet to officially claim the existence of the program and Bloomberg says that Apple Spokesperson, Amy Bessett, and Brightstar spokesman, Patrick Foarde, have both declined any comments.
Previously, Apple had not really looked at the refurbished phone market as a source of revenue even though there is strong demand for older Apple devices in developing countries. The push that the company needed came in the form of slower growth coupled with Samsung’s big push in the US.
Bloomberg reports that, “Apple sold 37.4 million units of the iPhone in the latest quarter, compared with 35.1 million a year earlier. Apple shares have declined 38 percent from a record in September, weighed down by investor concerns that the company’s era of rapid growth, fueled by the 2007 debut of the iPhone, may be over.” The article adds that, “While Cook has said some “game changer” consumer electronics products are in development, Apple is still trading at an 13 percent discount to Suwon, South Korea-based Samsung on a price-to-earnings basis, according to data compiled by Bloomberg. Apple shares rose less than 1 percent to $441.81 at the close in New York, leaving them down 17 percent this year.”
Figures from IDC also show the continued dominance of Samsung’s Android powered devices as it grabbed 75 percent market share during the first quarter of the year. Apple’s iOS devices only managed to take 17 percent of the market.
Bloomberg’s sources claim that the trade-in program will be used to help keep sales up in mature markets like the US. The devices that are procured during the program will be refurbished and then resold in developing markets that have a higher demand for the cheaper devices. This will also help stop the sale of older Apple devices in the US which eat away at purchases of newer products. The sale of refurbished phones directly from Apple at a cheaper price will also help stem the growth of Android devices in developing market while Apple prepares a cheaper iPhone.
Source: Bloomberg
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