The program will fill two roles for Apple. First, it will help boost sales of the iPhone 5; and second, it could give the company a way to sell cheaper iPhones in emerging markets.
The first role is an important one for Apple. Now that it is nine months old, sales of the iPhone 5 are beginning to sag. There's always been a large secondary market for used iPhones, but some consumers might be averse to selling their devices on Craigslist or eBay, and the legit online trade-in programs often require people to wait several weeks for checks to arrive in the mail.
[ Apple is not the only smartphone maker targeting emerging markets. Read Windows Phone Primed To Surge, Canalys Says. ]
Wireless network operators have already seen the writing on the wall and many of them have launched their own trade-in programs. AT&T, for example, will give customers up to $200 for an old iPhone. Rather than force customers to wait for a check to arrive or deal with buyers through Craigslist and eBay, the retail store trade-in programs provide an instant and hassle-free reward that can be applied toward the purchase of new gear. It's high time Apple began to take back some of the value that its used gear holds onto.
Apple is partnering with Brightstar to make the program happen, says Bloomberg. Brightstar works behind the scenes to provision devices for wireless network operators. It already handles trade-ins for AT&T and T-Mobile USA and refurbishes devices for later resale.
Putting this program into place could help Apple sell more iPhone 5s in the months ahead of the next-generation iPhone's debut.
It can also help solve Apple's low-cost iPhone problem.
North American and European smartphone markets are saturated. Most people have smartphones already. The real growth regions are in emerging markets where huge percentages of consumers don't have a cell phone at all, let alone a smartphone. Google's Android platform has seen great success in these markets because hardware manufacturers, such as Samsung, can offer very low-cost devices to those consumers. In fact, it is the low-cost segment that represents Android's reach. Apple's $649 iPhone 5 can't compete with smartphones that cost $99.
If Apple can resell its own iPhone 4 and iPhone 4S at a lower cost in emerging markets, it has a chance of converting people to iPhone users before they jump onto the Android bandwagon. That would be a win for Apple.
The company has not acknowledged plans to run a trade-in program, but it is one of many possible announcements that Apple might make come June 10 during its Worldwide Developer Conference keynote speech.