AT&T Inc. (NYSE:T) has instituted a promotion strategy aimed at reducing inventory levels for the current iPhones as Apple Inc. (NASDAQ:AAPL) prepares to launch its new line of products. If a user walks into an AT&T store, planning to purchase an iPhone on an installment plan, he or she will be entitled to a $200 discount on an iPad with a two-year service contract; if they decide to pay the full amount according to, Trish Regan, on Bloomberg.
Phone carriers have in the past been offering big discounts on tablets as well as smartphones, especially when the launch of a successor is nearing. The move essentially helps carriers boost their contract customers as a counter to the saturation of smartphone in the markets. It is still unclear as to the kind of impact the offer will have on the overall sale of Apple Inc. (NASDAQ:AAPL)’s iPads.
“AT&T is offering $200 discount on iPad’s as part of the iPhone sales promotion. The company wants to clear inventory ahead of its next iPhone. It’s also in an attempt to boost the number of data service subscribers,” said Regan.
The promotion strategy has not gone well with ‘The Roundup crew’ on Bloomberg of which Eric Chemi compares it to a scam. Service contracts have over the years been known to come with additional hidden costs of which most of the time always end up being quite expensive compared to the initial purchase price.
“But a lot of the discounts in the past have been gift cards which you can buy for anything, this one needs to go to an iPad; plus AT&T Inc. (NYSE:T) benefits from the contract from the iPad. If you get that also with the wireless signal subsidized Wi-Fi,” said Bloomberg’s Alex Sherman.
The offer comes amidst declining iPad sales that have already aroused concerns at Apple Inc. (NASDAQ:AAPL). The move will only help in reducing the inventory levels of AT&T Inc. (NYSE:T), but will not offer a long term strategy for Apple Inc. (NASDAQ:AAPL) on how to make a turnaround.
The move could on the other hand work to Apple Inc. (NASDAQ:AAPL)’s advantage if by any chance it is able to stimulate an increase in shipments to overseas markets.