) is buying back older versions of its smartphones in exchange
for credit that customers can use for purchasing the latest
iPhone scheduled for launch on Sep 10. The trade-in program
initiated at Apple stores is to ensure higher sales of the
A buyback option and a good buyback price will certainly boost
the buyer sentiment and make it easier for them to grab the
latest version. The credit given to customers will help them
cover the purchase price of the new version. This is a good
strategy to boost sales as the cost advantage makes the iPhone
Companies like Gazelle Inc. as well as wireless carriers such
AT&T Inc. (
) purchase used handsets. They are also sold in emerging
Of course, the exchange value or credit will depend on the
condition of the old phone. To make it more clear, an iPhone 5
with 64 gigabytes of memory could be worth $350 through Gazelle's
website, whereas the iPhone 3GS may not be worth more than $10.
The maximum price an iPhone can fetch at the Apple Store is fixed
at $280. So we believe that this is a win-win situation for both
customers and Apple.
The strategy will also help the company retain loyal customers
and help stem market share losses. Apple has been successful at
increasing iPhone sales, selling 31.2 million units of the iPhone
in the latest quarter, up from 26 million a year earlier.
The decision is especially positive at this juncture, when
Apple is facing tough competition from Google's Android, which
has also pushed back sales of
According to industry sources, the iPhone launch on Sep 10
would be followed by an updated lineup of iPads.
Apple has a Zacks Rank #3 (Hold).
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