Apple’s sneaky asterisk

From Ewan Spence’s  “Apple Wants You To Hand Back Your Magical iPhone In Three Years” posted last week on Forbes.com.

There are a number of advantages for Apple if this trade-in cycle can be established with as many iPhone users as possible. First of all moving from an older iPhone to a newer iPhone keeps users locked into Apple’s ecosystem. Given the strong emphasis that Tim Cook and his team are placing on services to generate future revenue, the number of addressable users must be kept as high as possible to continue growing the services.

Secondly, it boosts Apple’s sales figures. Not only can the new handset be regarded as a unit sale, but once the reconditioned unit leaves Cupertino for a new home, that’s an additional unit sale generated by a single handset.

Finally, given the ever increasing cost of a new iPhone (with retail prices reaching $1500), Apple can continue to advertise a lower price for its new iPhones by attaching a sneaky asterisk that the lower price only applies if you trade in specific models. The campaign to recycle old hardware is to be commended, but in an iOS-driven world of rising prices and falling sales, the secondary effect of this campaign will be welcomed by those watching Apple’s bottom line.

My take: Spence is right. It is sneaky. And it will be welcomed by those watching Apple’s bottom line.

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