Apple's iPhone Trade-In Program

By Vinayak on Wednesday, September 4, 2013 with 0 comments



The smartphone has become a prerequisite in the business world with Apple's iPhone leading the way until Android devices started catching up with their superior technology. Nonetheless, a lot of organizations from big corporations to fairly small non-profits have furnished free iPhones to full-time employees. One of the big problems facing smartphone users is the slowly increasing decay in battery life with the iPhone being no exception.

It is true that all batteries decrease in capacity over time and any new phone will have better battery life than one that's been in constant use for a year. So upgrading to the latest version of the iPhone (whether 5 or 5C) is always going to be an attractive option. Besides it improves productivity and keeps everyone in the organization in constant touch via mobile.

The iPhone trade-in program appears to be a responsive move rather than a reactive one. There are always going to be those that accidentally damaged their iPhones and are financially stressed; they will like the now lower entry point. Bring in a broken iPhone 4, 4s, or 5. Pay respectively $150, $180, $210 and then immediately walk out with a refurbished iPhone of the same model and memory including a much preferred new battery.

Granted, the Apple trade-in program is better than selling on eBay. Even iPhones that have been used for 2 or 3 years are selling for $100 to even $200 for a 4S on eBay. The shortcoming of selling on eBay is that they take 10% of the sales price including shipping! Then you also pay over 3% to PayPal to receive the money.

From an investor's standpoint it does seem like an encouraging sign that Apple has listened and provided a better customer experience in the hope of attracting potential customers in addition to existing ones.

Great time to be an Apple user

It seems like Apple has sweetened the deal for consumers to steal back market share from the Android devices. Android devices offer a lot of variety for consumers, but with this new offer from Apple, there is an attractive upgrade path.

A lot of people will want an Apple device as it will give them easier access to the the latest products. The good thing for Apple is that with the exception of Samsung (SSNLF.PK) the rest of the Android players don't have the wherewithal to offer a similar type of "trade-in" system.

The high end smartphone market has demonstrated considerable signs of saturation. But the market where consumers are shifting from a major feature-phone to a smartphone transition is still growing quite satisfactorily. The soon to be released iPhone 5C appears to be an attempt to expand its reach into lower price-point devices. There has been increasing competition and Apple has been forced to become more aggressive by pushing new products.

It will interesting to see sales of the 5C with the trade-in program in place. The iPhone 5 beat the 4S in sales volumes, but there wasn't as much of a positive vibe as was created when the 4S came out.  Sales for the iPhone 5 could have been much higher if not for consumers making full use of the price reductions on the iPhone 4 and 4S immediate after the iPhone 5 launch. The problem is that more and more consumers are not seeing the value of owning the latest-and-greatest iPhone.

So the iPhone 5S better have some amazing new features to jumpstart a substantial upgrade cycle. From a sideline view of things, it does appear that the trade-in program will boost sales of newer Apple products?  Apple shares should surge when the new product launches.

As it is, Apple has already had a bounce from its 52-week lows with some excitement after Carl Icahn's Appletweets. There is unmistakably a buzz around Apple - even more so than usual.  It will be innovation and new products that will drive the stock price. There's enough upside surprise and Apple has always been a great company. But will the stock have the miraculous run it had since the day Steve Jobs pulled an iPod out of his pocket in 2001? Only time will tell.

Category: Stocks

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