Brief:
- Apple has reportedly moved marketing staff from other projects to focus on boosting sales of the iPhone, while testing generous trade-in deals to spur demand during the crucial holiday buying season, unnamed sources told Bloomberg.
- As part of the effort, Apple this week updated its website to tout a $300 price cut on the new iPhone XR, which has a regular sticker price of $749. Customers need to trade in an undamaged iPhone 7 Plus, its flagship handset from two years ago, to get the discount.
- Apple last week ran a limited-time promotion that lifted the trade-in value of iPhones by $25 to $100. In recent weeks, Apple Store employees were told to mention the program more frequently to customers to drive trade-ins and sales of updated devices, per Bloomberg.
Insight:
Apple's efforts to boost iPhone sales — which drive about 60% of the tech giant's $266 billion in yearly revenue — aren't much of a surprise following multiple reports that parts suppliers like Lumentum, Japan Display, Qorvo and Cirrus Logic warned of slowing smartphone sales. But it's rare that Apple resorts to price cuts and sweetened trade-in deals to jumpstart iPhone sales. While the company cut the iPhone's price by $200 in 2007, less than three months after introducing the device, Apple has relied on the high-priced phones to increase revenue, even as sales flagged.
The tech giant is promoting its latest iPhones as the global smartphone market shows signs of stalling or even declining. Across all brands, smartphone shipments fell 6% to 355.2 million in Q3 2018 from a year earlier, the International Data Corporation (IDC) reported last month. Gartner, which measures smartphone sales to end users, this week offered slightly more optimistic data. The researcher said global sales grew a meager 1.4% to 389 million units in Q3 2018 from the prior year.
Apple's global market share has held steady at about 12%, while Samsung has lost share to lower-cost phones from Chinese manufacturers. Huawei saw demand for its smartphones grow by 43% in Q3 2018 from a year earlier, with significant strength in the emerging markets of the Middle East, Asia-Pacific and Africa, according to Gartner.
Meanwhile, the rollout of high-speed 5G mobile technology likely will be the next catalyst to jumpstart smartphone sales growth, with Gartner predicting 5G mobile phones sales to total 65 million units in 2020. However, Apple isn't set to release a 5G iPhone until that year, lagging behind rival Samsung. Verizon and Samsung on Monday said they plan to start selling a 5G smartphone to U.S. consumers in the first half of 2019. AT&T followed that announcement with its own plan to offer two models of Samsung 5G phones next year. Apple's delay may give Samsung a chance to convince Apple users to trade in their iPhones if 5G offers a significantly compelling experience for mobile users, from better handling of data, expanded use of mixed-reality streaming, immersive games, instant movie downloads, self-driving car navigation and more.
