With the debut of Apple’s new annual iPhone Upgrade Program, “the obvious change is that if you’re on, say, AT&T’s Next plan, your next ‘free’ smartphone might be an iPhone or an Android – with Apple’s plan it’ll be an iPhone,” Benedict Evans writes for Seeking alpha. “So where for a mobile network these installment + rapid upgrade plans are a way to stop you churning off the network, for Apple they’re a way to stop you churning from iPhone to Android. They’re another way to build the resilience of the ecosystem.”
“The second change is that Apple is explicitly entering the secondary market. If you get a new base-model iPhone every year, you’ll pay Apple $389 a year for a $650 retail-price phone every year,” Evans writes. “At the end of the year you give Apple the old one and it’s going to have to do something to make that back, or more. Given the difference is $260 but the resale value of year-old iPhones (unrefurbished) today is $300-$400, that shouldn’t be too hard. It does suggest more incentive for Apple to sell you a case, though.”
“Meanwhile, this means Apple will be selling both refurbished models from one and two years ago and also (as it does today) newly manufactured instances of those older models. How will that work? How will the margins compare? Will it cost $260 to make an iPhone 6S in a year (maybe)? Then, how and where will Apple sell these? One obvious answer is that they’ll go to emerging markets – to India, Latin America and, yes China,” Evans writes. “But how big will this be – how many people will take it up? How will Apple explain the difference?”
Much more in the full article – recommended – here.
MacDailyNews Take: All we need now are Apple SIMs in iPhones. Game, set, match!
Apple’s iPhone Upgrade Program may warrant higher earnings multiple – once Wall Street grasps what’s happened – September 15, 2015
Apple shares could rally 50% on new iPhone Upgrade Program – September 14, 2015
iPhone Upgrade Program: Apple’s brilliant strategy to turn carriers into ‘dumb pipes’ – September 11, 2015
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
SIM CITY? AAPL SIM? More Popcorn Plez.
I can’t believe that the “writer” only got around casually to mentioning “THAT THE PHONES ARE UNLOCKED” in the second to last paragraph…
The problem for Apple’s subscription phone service is that Verizon and other service providers offset the loss of the contract discount with service discounts. With Apple’s service, I pay full price for the phone and the service.
In my case (AT&T) I technically get a service discount because since I have an unlocked phone I use the Mobile Share plan, which is the same as a bring-your-own-phone-plan. That’s cheaper than a 2-year contract rate (for me) since they’re not baking the cost of the phone into the contract.
Lots of crap is going to be said “on the street”. I think my experience is typical of yearly upgrader fans of iPhone. Used to be each year AT&T and Verison would charge a penalty fee for early upgrades. The monthly take plus the penalty is quite likely higher than the new subscription service. Especially when you consider the providers never let you upgrade until well after pre-order dates. After they arbitrarily stopped offering early upgrade “opportunities” I wound up having to outright buy the iPhone 6 at full price. Add That Hit to my pocket to the yearly penalties and Apple’s new plan will save me a bundle and provide yearly upgrades.
No one who would ever consider owning Android/Windows will be using this plan in any event.
Still the Wall Street geniuses will gull the unwary with their usual lies while planning their next reverse mortgage type rape of our economy.
Shhhh: Here’s a secret…
This system is breaking the seal for WATCH. When version 2 is unveiled people will want to what: they’ll want to get the newest one. Which means trading in their current one.
Thus the PR will be that you always have the newest Apple WATCH. Every year you trade in your current one for the next one for a set of monthly payments, and if you don’t want to, you keep the watch after 12 months because you own it.
Lock in. Lock in, ease, and keeping people on the newest hardware for the sake of developers.
The real purpose behind the iPhone Subscription program is WATCH subscription program.
Betcha didn’t think of that until just now, huh?
I hope Apple does introduce similar kind of upgrade plans in India and mention them clearly on apple india website as well. If it happens I will upgrade one of my 4 year old iPhones which is a 4s to the new one. It will be a big hit considering there are no carrier subsidy plans in india similar to the one in US, this might just be a hit here.