Apple reassigns marketing staff to boost iPhone sales

Bloomberg

Apple Inc is experimenting with iPhone marketing strategies it rarely uses — such as discount promotions via generous device buyback terms — to help goose sales of its flagship product.
Company executives moved some marketing staff from other projects to work on bolstering sales of the latest handsets in October, about a month after the iPhone XS went on sale and in the days around the launch of the iPhone XR, according to a person familiar with the situation. This person described it as a “fire drill,” and a possible admission that the devices may have been selling below some expectations. The person asked not to be identified discussing private strategy changes. Since then, Apple has embarked on a series of aggressive trade-in offers that have temporarily reduced the cost of some of its latest iPhones, a rare step for a company that’s been raising device prices in recent years to lift revenue and profit. Apple spokeswoman Trudy Muller declined to comment.
Apple kicked these efforts into high gear, adding a new banner to the top of its website advertising the iPhone XR for $449, $300 less than its official sticker price. The deal, noted with an asterisk and described at the bottom of the page, requires customers to trade in an iPhone 7 Plus, a high-end handset from two years ago.
Apple has lost about a fifth of its market value since the start of October on signs of waning iPhone demand. iPhone supplier Cirrus Logic Inc cut its holiday quarter sales forecast 16 percent due to “recent weakness in the smartphone market.” Apple has also stopped reporting iPhone unit sales, sparking concern its most-important product is no longer growing.
Last week, the company started offering a limited-time promotion that boosts the trade-in value of older iPhones by between an additional $25 to $100. Apple retail employees have also been told in recent weeks to mention the program more often to consumers in stores, according to another person familiar with the situation. Some Japanese wireless carriers also cut iPhone XR pricing last week by way of subsidies. Last year, there were similar concerns about sales of the iPhone X, and the handset ended up selling well. And Apple has used similar marketing tactics before. In 2007, it cut the price of the iPhone by $200, less than three months after the device launched. When the iPhone 3G debuted in 2008, Apple worked with carriers to subsidise the cost. It has also quietly increased trade-in values for older iPhone models in the past.
Apple marketing executive Greg Joswiak tried to quell concern about sales by telling CNET last week that the iPhone XR has been the company’s best seller since it went on sale at the end of October. Regardless of such efforts, “investors are very focus-sed on the longer term strategy and growth outside of iPhones, given what we’ve seen now coming out of this last iPhone cycle,” Wedbush Securities analyst Dan-iel Ives said. “In a fearful technology environment, investors are- n’t going to give Apple benefit of the doubt.” Apple is working on several new products and services, including an augmented-reality headset, driverless car technology, and digital offerings like original video. Analysts also expect a new business model centered on subscriptions.
Those options are riskier than the iPhone, which for a decade enticed millions of consumers to hand over hundreds of dollars for a new handset every two years like clockwork. The public hasn’t flocked to AR technology in the same way yet, while Netflix Inc has a huge head start in digital video, Alphabet Inc’s Waymo leads in autonomous vehicles, and Amazon.com Inc’s Prime service has nailed subscriptions online.