Bloomberg: Apple focusing on aggressive trade-in offers to boost iPhone sales

Bloomberg reported on Tuesday that Apple is now “experimenting” with iPhone marketing strategies it apparently rarely uses, including discount promotions through generous device buyback terms, in an effort to help increase sales of its iconic smartphone.

As an example, iPhone XR which retails for $750 for the baseline model with 64GB of storage is currently listed on for $449, which is a significant $300 less than its official sticker price. The deal requires that customers trade in their iPhone 7 Plus, meaning the $449 reflects price of Apple’s colorful new handset after trade-in of an iPhone 7 Plus.

Author Mark Gurman:

Company executives moved some marketing staff from other projects to work on bolstering sales of the latest handsets in October, about a month after iPhone XS went on sale and in the days around the launch of iPhone XR.

A person familiar with the situation described it as a ‘fire drill,’ and a possible admission that the devices may have been selling below some expectations. The person asked not to be identified discussing private strategy changes.

Since then, Apple has embarked on a series of aggressive trade-in offers that have temporarily reduced the cost of some of its latest iPhones, a rare step for a company that’s been raising device prices in recent years to lift revenue and profit.

Apple spokeswoman Trudy Muller declined to comment.

Apple has additional trade-in values available that require purchase of a new iPhone. With Apple’s GiveBack program, for instance, customers can currently get a refund of up to $500 when trading in an eligible smartphone or recycling it for free. And for a limited time, Apple is offering extra credit for your used iPhone 6, iPhone 6s, iPhone 7 or iPhone 8.

Another excerpt from the article:

Last week, the company started offering a limited-time promotion that boosts the trade-in value of older iPhones by an additional $25 to $100. Apple retail employees have also been told in recent weeks to mention the program more often to consumers in stores, according to another person familiar with the situation. Some Japanese wireless carriers also cut iPhone XR pricing last week by way of subsidies.

While Apple said during the September earnings conference call that it would stop divulging Mac, iPhone and iPad unit sales going forward in a move that has rattled Wall Street investors, its marketing honcho recently acknowledged (without providing a number) that iPhone XR has been its best-selling model each day since launch.

Bloomberg has turned negative on Apple since pushing its “pile of bad news for Apple” narrative following unreliable supply chain reporting that described financial woes at a handful of Apple suppliers so this particular speculative story is more of the same.

Gurman would have you believe that Apple is under siege because iPhone growth is virtually flat, but “peak iPhone” was about two years ago so this is nothing new. Investors have baked slowing iPhone sales into their projections and the rest is business as usual.

Photo: iPhone XS launch in Sydney, Australia, courtesy of Apple

Bloomberg makes it sound as if those trade-in bonuses are a reason to panic whereas in reality Apple did resort to aggressive trade-in bonuses and other marketing activities in the past to help grow iPhone sales. Truth be told, such promotions would typically come in the middle of an iPhone cycle, not during the lucrative holiday season when new iPhone sales hit their peak.

If anything, this report severs as yet another indication of what we’ve known for the past few quarters: iPhone sales are barely growing in a flat/negative global smartphone market.

Who knew, right?