Apple wants you to buy your new iPhone at an Apple Store instead of at a carrier or big box retailer, and we could see a new push with the rumored iPhone 5S release to get shoppers into an Apple Store to buy the new iPhone.
The iPhone is sold at Apple Stores as well as at all major carriers in the U.S. and is also in stock at retailers like Best Buy, Walmart and others who routinely offer iPhone 5 deals and trade in specials.
In the grand scheme of things an iPhone sale in any of these locations is a win for Apple, but according to a new report Tim Cook is not happy about the number of iPhones sold outside of the Apple Store.
Tim Cook faces an uphill battle to compete with iPhone deals and the distance users need to travel to an Apple Store, but according to a new report Apple has a plan.
A 9to5Mac report claims Apple CEO Tim Cook is pressuring Apple Store leaders to deliver more iPhone sales at an Apple store so that consumers can experience the Apple brand in a controlled environment and get a better look at the iPad, MacBook Air, Apple TV and other devices.
According to accounts of the three-hour event, Tim Cook is unhappy that 80% of iPhones sold are not sold in an Apple Store. This is not a surprise given Apple’s well-known penchant for controlling the user experience, marketing and retail channel. In the report of the event, Tim Cook expressed a desire to bring more iPhone sales to the Apple Store retail channel. While iPhone sales often take place outside of the Apple Store, 50% of consumers make their way to an Apple Store for iPhone troubleshooting and replacements.
It’s no surprise that more iPhone owners go directly to an Apple Store for repairs, replacements and troubleshooting. While carriers offer in warranty replacements the replacement process is not as easy to use as driving to an Apple Store. For example, Verizon sends a replacement iPhone to the user and the user mails their broken iPhone back. If Verizon finds water damage or any physical damage, the company charges the user full retail price and keeps the phone.
At an Apple Store, the user can find out if the replacement is covered under warranty or not immediately. If the warranty cannot cover the replacement, Apple Stores offer deeply discounted replacement iPhones, for hundreds less than an off-contract iPhone purchased at a carrier.
Simply put, Apple delivers a better service experience than carriers and retailers, but can’t currently compete with pricing and sales.
Apple’s Plan Push the iPhone at Apple Stores
Apple is already offering a $50 gift card to students that buy an iPhone at an Apple Store, but does not offer any iPhone 5 deals to the average shopper. This could change as Tim Cook and Apple leadership look to compete with deals that offer the iPhone 5 for as low as $129.
Apple may also launch an iPhone trade-in program in time for the rumored iPhone 5S release this fall, which could help the company compete with carrier and retail trade-in programs. This program may even offer a cheaper means of upgrading to the latest iPhone from a broken iPhone according to the report.
Apple Stores can price match iPhone deals at official U.S. retailers already, but we may see a bigger push to educate consumers about the ability to price match the $129 iPhone 5 deal at Walmart to an Apple Store. This type of deal, as well as targeted Gift card promotions may be the only iPhone price cuts we see at the Apple Store outside of Black Friday.
Why Carriers and Retailers Aren’t Worried
While Apple can exert control over iPhone pricing to some extent, the past several months of iPhone sales show that Apple Stores are the most expensive places to buy the iPhone 5.
Walmart offers the iPhone 5 for $70 off retail and carriers like Sprint and AT&T offer iPhone 5 deals that drop the price of a refurbished iPhone 5 as low as $50. There’s also the free iPhone 5 deal at Best Buy which lets users trade in an old iPhone and pick up an iPhone 5 for free during specific weekend promotions.
Even without the powerful push of a lower price, carriers and retailers have a major upper hand on Apple. Many iPhone users need to drive an hour or more to reach an Apple Store, but retailers that sell the iPhone are as close as a 10 minute drive.
Consumers are also trained to go to their carrier for updates, and some carriers will call customers when an upgrade is near to get them to upgrade over the phone or in a local store.
iPhone 5S Release In Mind
The Apple Store iPhone sales push is clearly set with the iPhone 5S release in mind. Tim Cook told Apple Store leaders the company will deliver an “army of new products this fall,” and while he didn’t go into detail, this likely includes the iPad 5, iPad mini 2, a new MacBook Pro Retina with Haswell and the teased Mac Pro.
Apple refuses to compete with the lower iPhone 5 prices available at many retailers, but when the iPhone 5S release arrives, everyone will be on equal footing in terms of pricing.
Any iPhone trade-in program that launches in a few months would line up with rumors of a September or early October iPhone 5S release date, and could help Apple compete with Gazelle and other online trade-in sites as well as with carrier trade-in programs.
Ultimately to bring more iPhone sales to the Apple Stores, Apple will need to convince shoppers to skip the carrier and drive to an Apple Store to buy the iPhone 5S later this year.