iPhone Upgrade Program: Apple’s brilliant strategy to turn carriers into ‘dumb pipes’

“In the eight years since the first iPhone launched, no company has done more than Apple to change the dynamic and balance of power in the mobile industry,” Dan Frommer writes for Quartz.

“Apple’s latest move is called the iPhone Upgrade Program,” Frommer writes. “Following the lead of US mobile operators, Apple will sell its new iPhone 6S and 6S Plus on a monthly installment plan, starting at $32 per month, with annual upgrades to the latest model. Apple’s program isn’t as cheap as similar offers from some carriers (it also includes Apple’s extended warranty plan and phones are sold unlocked). But it does something more important: It converts its users from ‘carrier customers’ to ‘Apple customers.'”

Frommer writes, “By selling unlocked phones directly, Apple stands to potentially increase its customer loyalty—and marginalize the value of carriers, pushing them further into ‘dumb pipe’ classification.”

Read more in the full article here.

MacDailyNews Take: Yup.

Here’s to churn and the frenzied competition it creates! Lower wireless data prices benefit everyone but the dumb pipes.MacDailyNews Take, September 10, 2015

SEE ALSO:
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

[Thanks to MacDailyNews Readers “Fred Mertz” and “BD” for the heads up.]

34 Comments

  1. I like this. So anyone know if I get to keep my AT&T Grandfathered Unlimited plan? If not, I’m jumping to T-mobile unlimited. I don’t travel, and in my area its good enough!

    1. I have TMo and it’s not bad as long as you stay in populated areas. It drops off very quickly outside those areas.

      That being said Im excited about the extended coverage Tmobile will have through LTE and the 700mhz spectrum.

        1. You can go on monthly pay as you go plans with any carrier and because the phone is unlocked you can pop in whatever simm you want anytime. You can keep your unlimited ATT plan and use T-Mobile for its free roaming when needed and none of these greedy unappreciative dumb pipe assholes, ever get to tell you when you’re “eligible” fo a subsidized upgrade anymore, ever again.

          Apple lets you purchase an UNLOCKED phone in instalments of $30-40 payments, you get free Applecare+ and you are forever eligible for any and every year’s new model – no and ifs or buts.

          The icing on the cake is your freedom to use whoever gives you the best service, support, coverage and rates anytime you wish courtesy of Apple’s elimination of the dumb pipe parasitic contractual choke hold on consumers.

          Customers will now desert in droves all the theiving dumb pipe telcos, cutting them out as the middlemen, for the only better, unchalengable deal from Apple. Here come more loyal customers and shareholder value skyrockets.

    2. Why on earth would you care about keeping your grandfathered AT&T Unlimited* plan at this point? There’s much better values out there.

      *$100/month for a measly 5GB of data (which is how AT&T defines “unlimited”). You can get that exact same 5GB of data on AT&T’s exact same network for $45/month with StraightTalk.

    1. Well Fred, unlike you, people who actually have brains are capable of making enough money to afford the better things in life. Now go play with your Fire Phone and quit bugging the adults.

            1. …and your response? Was it wise? Was it worthy? Was it necessary? No, of course not! It is, by your definition, stupid. Shouldn’t be so stupid, blood, it makes you more stupid.

    2. I fail to see why you have a problem with giving Apple the money for the object they created. It’s their product….why wouldn’t they want to be the one’s making the cash instead of going through all the mobile phone companies. Just think of the logitistics they have to deal with because they outsource the cost of the iPhone to all the mobile carriers. It adds to the cost of doing things…

      1. If Apple yearly upgrade plan really catches on, their next move may be to lower the $32 monthly fee to $22 (after all, Apple will be saving a lot by no longer needing to manage subsidy plans). That would really wipe out the competition.
        Don’t forget that data plan rates will be under inreased pressure as well.

  2. There may be conditions under which Apple Upgrade Programme might actually be worthwhile.

    Under this programme, Apple gives you an interest-free loan in the amount of $770. This loan will pay for your iPhone ($650 plus tax; around $700), as well as for your two-year Apple Care Plus coverage. Apple will also allow you, during this two-year loan, to upgrade to a newer model at any time. You surrender your current phone, the loan is wiped clean and you get a fresh new loan. Whatever you still owe on that loan is considered paid off by returning the old phone.

    Depending on the timing, this might work well to one’s advantage. You buy a new iPhone a month or so before the new model is released. You upgrade sometime after the new model is released; you had paid of some $100 – 200 of that loan (with the balance remaining of some $500 – $600). Your old phone is now realistically worth less than the balance on your loan, but Apple will wipe that loan for you.

    For people who annually refresh their iPhone, buying it on a regular interest-free 24-month loan (with a carrier, with your credit card or elsewhere) is probably cheaper, but much more hassle (you have to buy your upgrade phone outright; you have to unlock and sell the old phone somehow, and you may have to pay off the loan and get a new one). Plus, you don’t get Apple Care Plus; you only get regular Apple Care, and for only one year (which means phone support for only three months), and you don’t get damage replacement coverage.

    Apple’s offering will be quite popular, I’m sure. It will liberate people from the grip of carriers. And that is always good.

        1. It’s right there on Apple.com:

          “After 12 installments, you can get a new iPhone and start a new iPhone Upgrade Program. No more waiting for your carrier contract to end. Just trade in your current iPhone for a new one, and your new program begins.”

  3. Any ideas to lessen the hassle of dealing with mobile carriers red tape and money pit policies would be welcome. I’m an expat living in Tokyo. Last week I used an app to buy a northern California phone number via in app purchase from Japan. It was painless and without all the endless BS I get visiting:( SoftBank/Sprint here. Thank you Apple for a platform where developers can offer these great apps! http://www.magicjack.com/magicApp.html

  4. for several months now ‘analysts’ have been whacking apple stock saying that carriers are now removing subsidies and that will end people buying ‘expensive’ iPhones. Carrier CEOs who kept saying they want a ‘healthy competition from suppliers and not an ‘iPhone monopoly’ ‘ said that cutting subsidies would encourage Android sales.

    dudes, Apple just ass kicked you.

    1. Yes, that’s what I noticed too: the “whack” on removal of subsidies equating to the sky falling was highly irrational because Apple has been sitting on tons of cash reserves as well as Apple Pay – – the Analysts totally forgot about the period when GM Finance was making more money than GM.

      The net result out of all of this is that the Carriers are the ones who just took the whack — and it is a self-inflicted one — because their hidden profit center is going to vanish. That hidden profit center was on their older contracts where the monthly price _didn’t_ automatically drop after 24 months: each month that that customer delays on getting a new phone was a “free” 25th, 26th, 27th … etc … payment to the provider.

  5. Contract free, unlocked, and competitive financed prices mean exactly that. The only difference at that point is their speed and reliability and price, and switching at any time means you can go with whatever suits your needs best for the moment. If you’re traveling, att or sprint for reliability and speed. If you’re at home for a month or so, maybe sprint or t-mobile to save money if you have decent service at home. Ultimately carriers are going to have to do a better job with pricing and their network to remain relevant and competitive. Apple is making it easier and more obvious than ever.

      1. Technically, there is no reason you can’t. When was visiting in Ohio about six to seven years ago, I had to buy a new phone to replace the one I had bought in Arizona. Kept my AZ number. This was all thru Verizon btw.

        However, when the wife and I checked a Verizon store a few weeks ago about upgrading our old flip phones to new phones (iPhones specifically) with a data plan to include our iPad, we got a film-flam runaround that would make a used car salesman envious. The sales rep even went to get the store manager.

        We’ve been Verizon customers for over 20 years. For a reason that made no sense, getting new phones and a plan would entail having to get new numbers.

        As it was explained to us, it had something to do with my wife and I being on a plan that was shared with my wife’s brother and his family. They live in Ohio and have Ohio numbers, while we live in AZ and have AZ numbers.

        We walked out without phones.

  6. I get this message when I try to pre-order a contract free iPhone: Your current AT&T account is not supported on the Apple Online Store. To complete your iPhone purchase, please contact AT&T or, if this is a business account, your company’s telecom manager. We apologize for the inconvenience.

    Wanted to buy a new phone under Apples Leasing program

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