The sales of iPhones are not surging like in the golden era of Apple Inc. (NASDAQ:AAPL). Executives of Apple have put aside praising of the features such as breakthrough technology, sleek design, to boost the sales. Instead, they are focusing on installment plans, giveaways, and trade-in programs to convince the users to buy and improve the sales in a sluggish market.
Sells digital services and iPhone accessories
Apple is finding new ways to improve the sales of the iPhone in a saturated market. They are persuading the customers to purchase a new iPhone and making them consume accessories and digital services. The strategy of Apple is yielding results, which are evident from an increase in sales in Q4 2019. Apple expects to grow the top line in the holiday season.
Though revenues of the iPhone declined, Apple is recording growth by selling apps to the existing users of iPhones. The company is also generating sales through the sale of attached wearable devices that include Apple watches and AirPods and from subscription to services such as iCloud storage and Apple Music. However, this strategy works only with the steady growth of active Apple devices.
Consumers replace handsets every 28.5 months
The customers are not replacing their handsets as they did in the previous years and creating a challenge for growth. On average, a smartphone lasts for 19.5 months. According to a recent survey conducted by the investment bank, users prefer to buy a new handset every two and a half years.
Tim Cook, Chief Executive Officer, and Luca Maestri, Chief Operating Officer, Apple offered a potential solution to this challenge during a chat with analysts. The company introduced an Apple Card that allows the customers to buy the iPhone in installment and payback in 24 months using that card. It offers interest-free installments to facilitate the growth of sales.
When Katy Huberty, an analyst with Morgan Stanley, asked CEO of Apple whether the sales of iPhone would grow in 2020, he evaded and said he is encouraged with the reaction to the launch of new iPhones. Cook said trade-in and monthly installment programs are yielding results in China. Some investors suggested Apple offer the iPhone on a subscription basis to boost sales. According to them, Apple should offer iPhone bundled with Apple TV+ content or iCloud storage and hardware at a monthly fee to improve revenues.