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Apple Doesn't Like How iPhones Are Sold

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One of Apple's (NASDAQ: AAPL  ) biggest competitive advantages over rivals has always been its large network of retail stores. Most other device makers sell primarily through third-party retailers and distributors. It turns out that Apple's not particularly happy with how iPhones are sold, since the vast majority is sold through third-party sellers like carriers.

The gateway drug
9to5Mac reported last week that Apple hosted a huge meeting with retail store managers from all over the world, and the main topic on the agenda was iPhone sales through Apple retail stores. Tim Cook talked at length at how the company needs to focus sales efforts on the iPhone. Mac and iPad sales through Apple stores are proceeding swimmingly, but only 20% of iPhones are sold through its own retail locations.

Even though the remaining 80% of iPhones are sold through other outlets, 50% of these devices are still serviced and supported at Apple's Genius Bars. Cook would prefer those figures to match up more closely, and Apple considers the iPhone like a "gateway product" that introduces consumers to other products like the Mac and iPad.

As part of this push, Apple is implementing several initiatives. The company just launched its annual back to school promotion, and for the first time is offering a $50 gift card with iPhone purchases. There have also been reports that Apple is about to launch an iPhone trade-in program within Apple retail stores, partnering with Brightstar to implement the program. Apple also has price matching policies, since third-party retailers sometimes offer discounts.

Home court advantage
Cook supposedly addressed the possibility of having carriers give sales reps incentives to push rival devices that carry lower subsidies, underscoring how important it is to have more control over the purchasing experience.

Last year, BGR reported that AT&T (NYSE: T  ) was trying to steer customers away from the iPhone, a claim that Ma Bell staunchly denied with an official press statement. Verizon (NYSE: VZ  ) CFO Fran Shammo provided a little more detail in how Big Red would lose out if it pressured customers toward devices they didn't actually want: Verizon Wireless would end up on the hook for two subsidies if customers return their devices under the 30-day guarantee.

AT&T's iPhone mix is also higher than Verizon's. An overwhelming 80% of AT&T's smartphone activations last quarter were Apple's device, while just 56% of Verizon's smartphone activations were iPhones. AT&T has a bigger incentive to move away from the iPhone.

Driving more iPhone sales through Apple retail stores reduces even the possibility of having third-party retailers prioritize competing devices.

Tim Cook reporting for duty
Apple still hasn't found a new retail chief after John Browett's brief stint, and the retail segment has been reporting directly to Cook ever since. Fortunately, the CEO has some ideas of how to boost iPhone sales through Apple retail stores.

Apple has a history of cranking out revolutionary products ... and then creatively destroying them with something better. Read about the future of Apple in the free report "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

Read/Post Comments (3) | Recommend This Article (11)

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  • Report this Comment On July 06, 2013, at 10:21 PM, leola65 wrote:

    I won't be trading in my iPhone anytime soon because it changes my phone plan. I need all the unlimited data to look for work and the only available wifi I have for my laptop is my hotspot. If I upgrade it will cost me almost $40 more a month at my current usage.

    Not to mention that when you trade, Verizon and AT&T only give you 8GB choice or charge through the nose for the 16 GB that was originally purchased.

  • Report this Comment On July 07, 2013, at 12:31 AM, Larnett wrote:

    It worked backwards for us I suppose. First we fell in love with our Mac Book then our I Pads. Now I have an IPhone too! I love them all!

  • Report this Comment On July 07, 2013, at 2:56 AM, ztomas1 wrote:

    Verizon actually has a 14 day return policy not 30 days

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