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The coming shift in Apple’s iPhone retail strategy

Apple (s aapl) CEO Tim Cook doesn’t just care how many iPhones his company sells, he also cares where they sell them. According to accounts of a meeting of Apple Store managers led by Cook gathered by 9to5Mac, Apple(s AAPL) is planning on implementing new policies in order to boost the number of phones sold through its own stores. That will include new incentives for customers and possibly the previously reported trade-in program.

The meeting was held in San Francisco and ran for three hours. The crux of Cook’s issue with the status quo at the stores is that while Apple sells most iPads and Macs to customers, it only sells 20 percent of the iPhones that make their way into customers’ hands.

From the report:

Even though 80% of iPhones are not sold at Apple Stores, 50% of all serviced iPhones are troubleshooted, repaired, or replaced at Apple Store Genius Bars. Cook reportedly hinted that he would like those numbers to be more in line.

It’s easy to understand why. Apple’s employees are trained to sell just one phone: the iPhone. Big box retailers and carriers just want to make a sale. And Apple uses its stores to train users not just about the new smartphone they’re looking to buy, but how it fits into Apple’s broader ecosystem; it’s an opportunity to also sell customers on an iPad or a Mac.

To boost iPhone sales in stores, Apple is reportedly planning to offer new incentives to customers — perhaps more like the current Back to School offer — and to retail stores that make the sales. It’s not clear what that would entail for Apple workers.

The part of the plan with most real-world impact to the average user is likely to be a trade-in program that Cook reportedly “hinted at” during the meeting. Bloomberg has previously reported Apple is planning to implement such a service. It would mean Apple would accept older devices as part of payment toward a newer device. There are many third-party services that have successfully implemented this, so Apple getting iPhone owners to come to the Apple Store to turn in an older device would be smart.

Not to mention, collecting older iPhones allows Apple to re-sell them as lower-priced devices in emerging markets where Cook is determined to grow his company’s market share.

4 Responses to “The coming shift in Apple’s iPhone retail strategy”

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  2. Hopefully Apple realizes that there are emerging markets in the US and Europe too. In today’s economy there are quite a few groups with tight budgets that need introducing to the entire Apple ecosystem.

    Students smart enough to not be running up huge college loan debts.

    Recent college grads who can’t find good paying jobs in this dismal economy.

    Newly married with home and kid expenses that leave little for anything extra.

    All are potential customers and all will be getting offered discount phone offers from Apple competitors.

  3. r00fus

    Collecting older iPhones also removes used eBay iPhones as a competitor to the latest iPhones.

    I think Apple realizes (and probably has for quite some time) that a high resale value is very beneficial to the vendor… if the vendor has to step in as another buyer to lower the float (and raise resell price), all the better both for Apple and iPhone owners who benefit from a higher resale later on.