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Apple Takes a Page Out of T-Mobile's iPhone Playbook

By Evan Niu, CFA - Apr 12, 2013 at 8:00PM

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Sorry, U.S. customers, but this trade-in program isn't for you. Apple's new aggressive push into India is already starting to pay off.

The "Un-carrier" is going all out with an aggressive marketing campaign, targeting iPhone users on other networks. T-Mobile is now accepting trade-ins for older iPhone models, which can help offset the down payment on a new iPhone 5 on its network. It turns out Apple (AAPL 0.11%) is now doing the same thing.

Sorry, prospective U.S. upgraders. This deal isn't for you. We're talking about Indian consumers that now have the option to trade in any smartphone through an Apple reseller to help offset the cost of a new iPhone, according to a recent report from The Times of India. It's the latest is a string of initiatives that Apple is pursuing in the world's second-largest country by population to boost sales.

It's the first time that Apple's ever offered such a program that targets competing products. The Mac maker has long had a recycling program primarily for its own gear, issuing gift cards for Apple products on their deathbeds. Apple will accept old products made by other manufacturers, but simply recycles them without offering any credit.

Since Indian consumers are price sensitive in the absence of carrier subsidies, Apple has been pushing its iPhone 4 more aggressively, since that's the most affordable model it has. The device, originally launched in 2010, still retails for $485, but a trade-in brings that price down to $360 or less, depending on the value of the trade-in.

The minimum trade-in value is approximately $125, with a little over $90 of that being reimbursed to resellers from Apple distributors. That money has to be coming from somewhere, likely in the form of kickbacks from Apple.

Naturally, Samsung has responded by copying the tactic. The South Korean company now offers a similar trade-in program, defending its dominant status in the Indian market.

The mid-range $220 to $400 price segment offers respectable volumes that Apple hopes it can tap with the iPhone 4. However, the low-end segment is putting up the most impressive growth, which local players like Karbonn and Micromax are riding to riches.

Still, early signs indicate the program is working, with iPhone sales tripling a week after it was implemented. A local retail exec is quoted as saying that Apple has never targeted the Indian smartphone market as it is now.

Just wait and see how the rumored affordable iPhone fares in India.

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