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Apple Doesn't Like How iPhones Are Sold

Evan Niu, CFA
July 6, 2013

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 giv