Selling 50% of iPhones through Apple's retail stores viewed as an unrealistic, lofty goal
Apple Chief Executive Tim Cook apparently hopes to sell as many as half of all new iPhones in the U.S. through his company's own retail stores, but a new analysis suggests that target may be unattainable.
The company has recently begun a retail initiative in hopes of boosting sales of the iPhone at Apple Stores, rather than having customers obtain their handset through carrier partners or smartphone resellers.
One approach being attempted by the company has its retail employees talking to customers about upgrade opportunities if they bring in their iPhone to a Genius Bar for repairs. Currently, about half of all iPhones that need repair are serviced at a Genius Bar, and Cook would like to see sales figures match that share for Apple retail.
But Cook's goals may not be realistic, according to new data from Consumer Intelligence Research Partners, detailed on Wednesday by AllThingsD. That's because Apple's retail locations are already well-trafficked, and an influx of new sales may not be possible without a major increase in locations and employees.
"We don't see how their mostly jammed stores can handle more customers, sales associates and inventory," CIRP co-founder Michael Levin said to reporter John Paczkowski.
CIRP's latest data shows that the share of iPhones sold through Apple retail stores in the U.S. is currently less than 15 percent, having steadily declined from 20 percent since the launch of the iPhone 5 last September. About 30 percent of U.S. iPhones are sold through Apple's largest carrier partner, AT&T, while Verizon's share is just north of 20 percent as of June 30.
Apple's sub-15-percent share comes in third, while carriers T-Mobile and Sprint are clustered with retailer Best Buy at around 10 percent of iPhone sales.
CIRP also revealed that 90 percent of first-time iPhone buyers purchase Apple's smartphone at a carrier store or reseller ? not an Apple Store.
Apple's hope is that driving iPhone sales through its own stores will increase the handset's "halo" effect, which drives customers to buy other products from the company. For example, CIRP's data shows that 52 percent of iPhone buyers at an Apple Store own an iPad, and 30 percent own a Mac laptop. In contrast, just 37 percent of iPhone buyers at a carrier own an iPad, and 20 percent have a Mac laptop.
To further its efforts to bring in more iPhone customers and sell them upgrades, Apple also plans to begin taking iPhone trade-ins at its retail stores. But Levin and CIRP aren't convinced that will work.
"We don't know, exactly, how Apple can realistically meet Cook's goals," he said.
The company has recently begun a retail initiative in hopes of boosting sales of the iPhone at Apple Stores, rather than having customers obtain their handset through carrier partners or smartphone resellers.
One approach being attempted by the company has its retail employees talking to customers about upgrade opportunities if they bring in their iPhone to a Genius Bar for repairs. Currently, about half of all iPhones that need repair are serviced at a Genius Bar, and Cook would like to see sales figures match that share for Apple retail.
But Cook's goals may not be realistic, according to new data from Consumer Intelligence Research Partners, detailed on Wednesday by AllThingsD. That's because Apple's retail locations are already well-trafficked, and an influx of new sales may not be possible without a major increase in locations and employees.
"We don't see how their mostly jammed stores can handle more customers, sales associates and inventory," CIRP co-founder Michael Levin said to reporter John Paczkowski.
CIRP's latest data shows that the share of iPhones sold through Apple retail stores in the U.S. is currently less than 15 percent, having steadily declined from 20 percent since the launch of the iPhone 5 last September. About 30 percent of U.S. iPhones are sold through Apple's largest carrier partner, AT&T, while Verizon's share is just north of 20 percent as of June 30.
Apple's sub-15-percent share comes in third, while carriers T-Mobile and Sprint are clustered with retailer Best Buy at around 10 percent of iPhone sales.
CIRP also revealed that 90 percent of first-time iPhone buyers purchase Apple's smartphone at a carrier store or reseller ? not an Apple Store.
Apple's hope is that driving iPhone sales through its own stores will increase the handset's "halo" effect, which drives customers to buy other products from the company. For example, CIRP's data shows that 52 percent of iPhone buyers at an Apple Store own an iPad, and 30 percent own a Mac laptop. In contrast, just 37 percent of iPhone buyers at a carrier own an iPad, and 20 percent have a Mac laptop.
To further its efforts to bring in more iPhone customers and sell them upgrades, Apple also plans to begin taking iPhone trade-ins at its retail stores. But Levin and CIRP aren't convinced that will work.
"We don't know, exactly, how Apple can realistically meet Cook's goals," he said.
Comments
You have to set unrealistic goals when networks are dumping iPhones.
I remember reading in the Steve bio book, he wanted to setup Apple's own wireless carrier network. Apple should do that (I am not telling seriously. But hoping seriously)
A good point. If the stores are jam packed how can they increase sale?
Making a phone seen as an unrealistic, lofty goal.
Making a tablet seen as an unrealistic, lofty goal.
Making a music player seen as an unrealistic, lofty goal.
Making vertically integrated computers seen as an unrealistic, lofty goal.
More importantly, there's no evidence that Apple has EVER stated a goal of selling 50% of iPhones through its retail stores. This is just another example of someone making up some silly claim, pretending that it's Apple's goal, and then claiming it's unrealistic.
Once again, someone needs to track the accuracy of these analysts and ignore the ones who are always wrong (which is about 90% of them).
Quote:
Originally Posted by matrix07
A good point. If the stores are jam packed how can they increase sale?
There were jam packed before the holidays, I have seen around 80% traffic decrease since then at the one near my workplace.. They will really need to come up with something big to make people drive extra miles just to buy an iphone. IF the carriers are selling at the same price, why would someone go to a more distant Apple Stores?
Taking trade is is a good idea, but not enough imo. And they cant start a price war with the carriers imo. They dont have to make them buy it there, they just need to make them come to a store at some point after the sale. So they could give something once the sale is made at a reseller, like a free case.
Quote:
Originally Posted by jragosta
More importantly, there's no evidence that Apple has EVER stated a goal of selling 50% of iPhones through its retail stores. This is just another example of someone making up some silly claim, pretending that it's Apple's goal, and then claiming it's unrealistic.
Once again, someone needs to track the accuracy of these analysts and ignore the ones who are always wrong (which is about 90% of them).
You doubt Tim Cook comments but you dont take 5 secs to google it?
These comments are more of the same games to drive down the stock a bit so they can buy low before the next iPhone etc come out. It's gross
But what they can do is change up contracts so the carriers etc can't do wild and crazy discounts, trade ins or even sell in their stores if its within x distance from an Apple store. But these are rather jerk moves so they won't likely come, at least not at first. Although if this budget phone is real I won't be shocked if its only at their own stores. No third party.
Given some of the crap I've seen and heard about carrier purchases like not belong told about apple care, no returns even the next day etc, I wouldn't be bothered if the carrier stores were cut from selling iPhones.
Quote:
Originally Posted by Brian Ward
I am hoping the plastic-looking iPhone we've been seeing is designed to be sold without operator contracts and THAT is how such a goal could be accomplished. I am hoping the Moto X is the same way and we will have big competition in the no-contract space.
imo they will still be sold with contracts in countries that allows it. So probably free with contract. In my case, with the contract moving from 3 years to 2 years with a huge price increase, I will buy my next phones unlock for sure and go take a cheap Virgin mobile package. My wife is paying $35 a month with an unlock phone while I pay $75 a month for my 4s. With the contract duration change, by package will be over $100/month. And to top it off, if my wife doesnt used her data plan, she only pays $25/month for those months.
So please tell me why I should go out of my way for the same product. The iPhone is just simply available at too many locations for this to be achieved. What I find humorous is that they started selling at other outlets to sell more iPhones %u2013 they can%u2019t have the cake and eat it too.
I'd love to have an Apple store in every neighborhood, but to have that many Apple reps in every store just does not make any sense.
Quote:
Originally Posted by Rogifan
More media D&G, just like the stupid Seeking Alpha piece that an unannounced product (iWatch) is a "debacle" because Apple doesn't spend enoug on R&D. Or Bloomberg running with a rumor today that the next iPhone is going to be delayed because Apple decided at the last minute to change the screen size. Of course the media puts all this FUD out the week before earnings to effect the stock price.
That is true. Lots of Bs going on right now. EPS estimates are very low at $7.3 and even the whisper number is just $7.5 That is a pretty big YoY decline priced in. Lets hope Apple can top that even with no new products since the end of last year.
ok, wow, the whisper number is now even lower at $7.43 Its the first time I have ever seen those 2 numbers so close, expectations are rock bottom. We need to pay attention to Verizon numbers tomorrow and compare iphone sales to last year, same quarter.
This seems like faulty reasoning at best and based on very limited information. A lot of those people "jamming" the stores are just there to check out the products. If there was a cheap available iPhone that they could quickly buy and walk out of the store with, they certainly might do that. There is no need to assume that *new* customers buying the phones need to *also* jam into the same store.
If Apple did come out with a cheap off-contract phone (looking far less likely now I know), that people could just pick up and buy and walk out again, that would also change the entire equation. If they even went back to their previous practice of allowing people to activate them at home by themselves that would likely boost store sales tremendously.
How to tell that the rest of the post is nothing but utter lies, Alex!