New Research Reveals Why Apple Is Entering the Smartphone Trade-In Market
Why is Apple looking to get into the secondhand smartphone business? Well, there's profit to be had.
According to a new report, if you're in the smartphone business and you're not offering a trade-in program, you're probably losing business or not gaining new customers.
That's probably why Apple (NASDAQ:AAPL) is reportedly planning to get into the smartphone trade-in business.
The study, titled "Trade In, Trade Up, Trade Out," surveyed 1,000 smartphone users in July. It found that 55% of respondents said they would trade in their old phone when it came time to upgrade, while 60% said they would consider the value of a retailer's trade-in program when choosing their next carrier.
This study proved that these programs represent significant value to customers, and that's why the major carriers, including AT&T (NYSE:T), Verizon (NYSE:VZ), and T-Mobile (NYSE:TMUS) have each not only embraced trade-ins, but recently revamped the programs to allow customers to upgrade sooner for a monthly fee.
An iPhone 4S, for example, has a trade-in value of around $200, with Amazon (NASDAQ:AMZN) offering as much $300 for the 16 MB model.
Apple is reportedly getting into the trade-in program as well. According to Bloomberg, Apple will partner with Brightstar Corp., the same company that runs trade-in programs for AT&T and T-Mobile, to offer it to customers at its retail locations. Customers who bring their old iPhone to an Apple store will receive cash.
Why does a high-end company like Apple want to be in the secondhand business? Because it's profitable. The company will be able to profit from a growing demand for unsubsidized phones that are preferred by consumers in markets outside of North America.
There might be another reason. According to AppleInsider, less than 15% of iPhones sold in the US come from an Apple retail store and CEO Tim Cook doesn't like that. Implementing a trade-in program could help to draw more customers in to the store to purchase a phone directly from Apple, especially if the trade-in program were just as good or better than those of the carriers.
Along with the rumored trade-in program, a new version of the Apple Store iPhone app alerts customers when they are eligible for an iPhone upgrade. It's clear that Apple is stepping up its efforts to capture more direct sales of its mobile devices.
Disclosure: At the time of this writing, Tim Parker was long Apple.
Below, find some more great ETF and market content from Benzinga:
What Will a Bezos-Owned Washington Post Look Like?
Apple Responds to Electrocution Controversy With Tradeback Program
General Motors Slashes Chevy Volt Price by $5,000 to Boost Sales
Benzinga Pro covers this and all market news in real time. Get your free trial here.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter