John Paczkowski

Recent Posts by John Paczkowski

Should Apple Extend Its iPhone Trade-In Program to Other Phones?

Disposition_pre_iPhone_CIRPApple’s long-rumored iPhone trade-in program kicked off last month, offering customers up to $280 of in-store credit toward a new iPhone for used iPhones that meet the company’s trade-in criteria. The program is a part of Apple’s plan to increase the number of iPhone sales made through the company’s retail stores, and sources tell AllThingsD that it’s already showing some early signs of success.

But, according to a new study from Consumer Intelligence Research Partners, it might be more successful if Apple were to extend it beyond iPhones to include other smartphones.

And the reasons for that are pretty simple: iPhone owners are more apt to keep their device or give it to a friend or family member than they are to sell them. According to CIRP’s analysis, which covers iPhone purchases since Oct. 2012, 47 percent of iPhone owners kept their old device when they upgraded to a newer one. Another 22 percent handed them down to a family member or friend. Only 16 percent sold them — largely via eBay, Craigslist, and Gazelle.

CIRP_2

That’s a fairly small percentage. And, while it might increase with the advent of Apple’s trade-in program — which promises a convenient one-stop sell-old-iPhone/buy-new-one transaction — it probably won’t do so by much, as long as iPhone owners continue to keep or give away their old devices.

So, if Apple really wants this trade-in program to have a significant impact on new iPhone sales, it might want to consider accepting other brands of smartphones.

“It would be more effective to accept rival smartphones, relative to just accepting iPhones,” CIRP co-founder Michael Levin told AllThingsD. “First, iPhone buyers that sell their old smartphone (not iPhone) do that in less-established channels relative to iPhone buyers that sell old iPhones. Second, these are exactly the kind of customers Apple wants, people with other smartphones, and a decent trade-in program just brings these folks into Apple Stores.”

Makes sense. An iPhone owner upgrading to the latest iPhone is already an Apple customer. A smartphone owner trading in their handset for an iPhone is a new Apple customer, ready to be introduced to the company’s broader product and services ecosystem. Clearly, there’s a customer-acquisition opportunity there. But, right now, Apple doesn’t seem interested in taking it. Perhaps it’s just too early on in the program. Or, perhaps, Apple doesn’t want to be bothered with orchestrating trade-ins for devices it doesn’t build.

“We don’t know why, exactly, Apple won’t accept other smartphones, since they could easily recycle them,” said Levin. “… It might have something to do with not wanting to create a better market for other used smartphones — once Apple starts proposing a price, it implicitly affirms the value of competitors’ equipment.”


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