Tim Cook Admits Lower Cost Used iPhone Sales Are Good for Apple

By Wayne Rash  |  Posted 2014-07-23 Print this article Print
Used iPhone Sales

He also noted that at some point these people will decide to buy a new full-price iPhone.

While Apple sells some of these previously owned phones itself, most apparently are sold by third parties. But they serve the same essential purpose, which is to expand the iPhone universe. After all, a certain number of those iPhones will generate accessory sales, music sales, which generate other revenue for Apple.

So it's all good, right? One way or the other, more iPhones mean more loyal customers and more revenue. But is using the third-party market for used devices really the best way for Apple to expand its market share? Chances are other industries that face similar problems have learned better approaches.

A good example might be the automotive industry, which bears a close resemblance to the smartphone market. Every maker markets a number of vehicle models at different price points so that more people can afford their products. In addition, companies that sell globally tailor their products for each market.

One thing I've noticed when I travel is that some automobiles that are selling for a lot of money in the U.S. sell for much less in less affluent markets. Mercedes Benz, for example, sells expensive luxury cars in the U.S. But if you travel to developing markets, you see examples of Mercedes Benz cars that are affordable to people at all income levels.

I routinely find myself in taxicabs made by Mercedes Benz, for example, riding in cars that are nowhere near as luxurious as those in the US. Their more modest appointments make them affordable to people at a wide variety of income levels.

While there is a healthy market for used cars exported from the U.S., auto companies sell a lot of new cars in foreign markets for a lot less than what they cost in the U.S.

So why is Apple still insisting on selling only two lines of iPhones, both of them expensive? Mr. Cook's predecessor apparently didn't have the vision making Apple a global smartphone maker and as a result didn't feel the need. But Tim Cook has figured out that Apple is a global company. Because of this, Apple needs to expand its product offerings to include phones that more people around the world can buy.

Failing to produce an affordable version of the iPhone only leaves money that's picked up by phone makers who are more than willing to sell smartphones that everyone can afford, such as Android models, for example, but not Apple.


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