Apple’s annual iPhone Upgrade Plan is a game-changer

“In case you missed it, the iPhone Upgrade Program is Apple’s own implementation of installment billing for phones,” Jan Dawson writes for Tech.pinions. “In this piece, I wrote the installment billing plans carriers were beginning to introduce could end up coming back to bite them. The reason? Customers no longer needed the carriers to subsidize phones and were, in fact, being trained to pay for their own devices in installments. Apple, Samsung, and potentially other device vendors might eventually introduce their own similar plans and that could be bad for carriers.”

“Fast forward to this week and, sure enough, Apple has finally done what I first said it should do a year and a half ago,” Dawson writes. “So why is this a big deal? Well, the reasons are fairly simple: it allows Apple to take over the primary relationship with the customer, relegating the carrier to a secondary role in relation to their device purchase.”

“The other interesting thing about the iPhone Upgrade Plan is that, even though it’s starting out as a US offer, it will spread to other markets over time, including some where carriers don’t subsidize devices and where the iPhone therefore suffers from its premium pricing,” Dawson writes. “In some of these markets, Apple’s leasing plan will give the iPhone a significant boost versus historical performance and market share.”

Read more in the full article here.

MacDailyNews Take: Anything that’s a win-win for Apple and lose-lose for carriers if a Very Good Thing™.

Apple takes aim at the carriers with annual iPhone Upgrade Program – September 10, 2015
How Apple’s annual iPhone Upgrade Program works and how much it costs – September 9, 2015


  1. How does Apple’s monthly payment offering break out mathematically with carrier subsidizing, lower cost phone plans as a result of no subsidizing, and selling old models to places like Gazelle when upgrading? Do we come out ahead going with Apple?

    1. Can you really look at this as Apple and Apples like that? The subsidy locks you in for 2 years and 1 phone. No AppleCare and the same wireless plan. I think it’s difficult to compare. What do you think?

    2. It’s a Convenience Factor. It’s slightly cheaper if you pay for the phone up front, and sell your older phone when you want to upgrade. Apple’s upgrade plan takes care of all of that for you, if you pay their imputed premium built in to the monthly payment plan.

  2. So I f I pay $40 per month for a phone from Apple… Which is $480 out of my pocket per year, including AppleCare, which I didn’t have from ATT, and after 1 year I can get a new phone, probably for the same price… It’s not terribly better than my old plan, but the benefits are a no brainer. Not to mention Apple doesn’t have to wait 2 years to sell me a new phone like they do with millions of users. It’s just good business all around.

    1. I speculate that ATT and Verizon have made a big mistake in going away from the subsidized model. Apple is now in the iPhone driver seat. I look forward to mathematical models from MacD readers on this for both Apple and the rest.

    1. I have had the same plan for years and didn’t want to give up my unlimited status with ATT. Stupid me. The plan I just signed up for is $55 USD, unlimited calls and texts and 2GB data. the only hit is $15 USD for every gig used beyond that. I’m very happy where this is going… UK plans seem pretty legit!!

      1. My UK deal is excellent. I don’t use a hell of a lot of data or make that many calls, so I get 250 mins ( with some types of calls free ), unlimited texts and 500MB of data for £7.50 ( $11.50 ) per month. I never hit the limit, so I’m very happy with that deal.

        My wife uses her iPhone a lot more so pays a £10 monthly charge and gets double the calls and data that I get. There are other deals with the most expensive one being £20 ($30 ) per month, which offers unlimited everything.

        We also have an emergency phone that we lend to visitors and when it’s expected to be needed, we buy a £5 deal for a month, which offers 100 mins, 300 texts and 100 MB.

        We can even tether devices to our iPhones with the blessing of the company and at no extra cost. By comparison, the deals that US companies offer do seem rather expensive and limited.

        Our iPhones were bought outright and are unlocked, so there are no other charges or taxes relating to our phones. Being unlocked, they sell for more when we upgrade and we can switch to any other network whenever we choose.

        When we travel abroad, we get a local data-only SIM card for the cellular iPad and save a fortune compared to data roaming. We prefer not to put local SIM cards into our phones because we occasionally need to be contacted, so we need the phone number to remain unchanged.

        Having an unlocked phone is they key to enjoying this degree of flexibility. I’m astonished that the US carriers have moved away from subsidising iPhones, because they provided locked phones which locked their customers ( and sometimes subsequent customers ) into staying with their service.

  3. • I can switch plans, not locked in.
    • I deal directly with Apple more, thank God.
    • FREE tech support and AppleCare.
    • Annual Phone refresh, if I choose.
    Where is the down side again? Right the Pros are in the favor of both Apple and the the client, win-win is always going to be a game changer!!!!

  4. Some of us are stuck on the subsidy. Any changes to our plan, not only looses the subsidy, but razes our rates. It’s loose – loose. This is the first year that I “have” to buy my iPhone from AT&T. I can no longer go to Apple. Seems like 2008 all over again.

    1. Why???? Get out of it, pay ETF and get an unsubsidised plan (with whichever carrier gives you best deal and coverage).

      “Subsidised” plans are more expensive because of taxes. When your monthly plan includes phone subsidy, the entire monthly rate is taxed at close to 20% (in some states more), as ‘wireless service’. When you buy your phone up-front, you pay retail tax (below 10%, in some states as low as 3%). Over the two-year contract, you paid almost $100 in extra taxes for that iPhone — essentially donating money to the US government.

      1. On AT&T, Adjusting for subsidy, I am paying $42 per month for services. Unlimited data, unlimited phone to phone, shared 600 anytime minutes, and 200 texts. These numbers include taxes. Unlimited means 5GB LTE and 2G after that.

        In comparison, my sons iPhone, on the cheapest plan I could find, was $25/mo for a single line – unlimited 2G, calling and text, on a T-mobile mmo. This has very spotty coverage.

        I don’t see how switching plans will save me money, which is why we would switch – to save money or add features. As it is, I want to pay less, not add or lose features.

        This is why I would keep the plan I have, and stick with the subsidy. Reasoning that on AT&T I would end up with more features than I use or need while paying $27 more per month, going with the current family sharing plan and Next.

        Also while no one is saying this, you can add AppleCare+ for $99 to your iPhone purchased from your carrier. Just buy it at the Apple Store or on line. This is would be cheaper by about $20.

  5. Carriers are moving away from “subsidy”, towards interest-free 24-month loans, but most are essentially offering the same conditions as before.

    You pay $200 up-front and get an iPhone 6s. You then pay some $70 per month for an individual unlimited-all plan. In the old ‘subsidy’ model, the plan was fixed forever; in the new ‘interest-free loan’ model, some $50 of that monthly rate is the actual service, and $20 is the loan installment.

    For consumers, there appear to be no differences: you can get an iPhone for $200. But there are three major advantages for consumers:

    1. When you pay off your loan, your monthly rate automatically goes down

    2. The tax on your phone is much lower (you pay retail tax, which is below 10%, rather than ‘wireless service tax’, which is close, if not even above 20%)

    3. You can upgrade your phone at any point during the contract. There is no arbitrary, exorbitant ETF (Early Termination Fee). You pay of the remaining balance on the interest-free loan and take out a fresh new loan with the new phone. The old phone is yours, free and clear — you can sell it (Gazelle, Ebay, CraigsList…), hand it down, gift it, do whatever you want with it.

  6. Apple’s leasing plan is about twice as expensive as what you’d end up paying if you take interest-free loan, then sell old phone to buy a new one. After one year, the balance on your phone loan will be about $230. A one-year old previous model is usually worth close to $450, upon introduction of the new model. You sell the old phone for $430, you pay $200 for the new phone and still have some $230 to pay of the loan balance. You essentially break even, with the monthly installment of only about $20 (compared to Apple’s over $30).

  7. Has anybody figured out how we will switch from AT&T Next plan to iPhone Upgrade? For most of us who jumped on Next a year ago, we’re eligible for an upgrade, but still owe 8 of the 20 payments.

    I *assume* we will buy our new 6S under the iPhone Upgrade program and then return our iPhone 6 to AT&T to waive the final 8 payments? Can anyone confirm?

  8. This plan will cost me more. I currently have unlimited with AT&T and have 4 lines of service. I get an upgrade every year and pass the year old model down to the wife, then hers goes to the kids. I won’t be able to do this with this new Apple plan. Where before I paid $399 for the 128 gig 6, and kept my unlimited.. Now I will have to pay 41 per month and if I want the new one next year I have to give it back.. I don’t like this plan.

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