“The iPhone Update Program, and it will be offered for the first time a week from today to qualified customers who buy a new iPhone at any U.S. Apple Store,” Philip Elmer-DeWitt reports for Fortune. “It’s basically a leasing program with benefits.”
“If you qualify, you should grab it,” P.E.D. reports. “You won’t get a much better deal from the carriers.”
P.E.D. reports, “But it’s an even better deal for Apple.. [with analysts] enumerating the multiple benefits Apple stands to reap from the program:
• It gets to sell more high-margin AppleCare+ contracts
• It locks customers into the iPhone indefinitely
• It halves the iPhone upgrade cycle (to 12 months from 24)
• It builds an inventory of used phones that can be refurbished and resold
• It takes control of, and legitimizes, the grey market for second-hand iPhones
• It unbundles hardware costs from carrier costs
• It leaves cell service complaints clearly in the carriers’ hands
• It raises Apple’s gross margin from 50% to 55%
Read more in the full article here.
MacDailyNews Take: It’s a win-win for everyone but the carriers and, likely, Android as Apple’s iPhone is the aspirational smartphone, not iPhone knockoffs.
SEE ALSO:
Annual iPhone Upgrade Program could power Apple to become world’s first $1 trillion company – September 16, 2015
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
This is why AT&T wants you to come to them for their 2 year contact. Expect carrier deals to get better. Soon.
I bought att 2-yr contract because I’m grandfathered unlimited data. $499 + $83 sales tax + $45 upgrade fee.
News: Some National FamilyTalk 700 plans are getting a free upgrade to unlimited any time. They pay the same rate but are encouraged to never change their plan. That’s a savings of $140/mo on four lines. Or a savings of $20/mo on a single line. @FutureMedia, check if you are on or qualify for a FAN. Some fans have 20% discount and upgrade fee waivers.
I’m not a fish; I’m not gonna bite on another AT&T ripoff contract.
There are some that are grandfathered in under old plans. One person I know has an old plan with unlimited voice and data and his wife’s line only costs an additional $9.00 a month. For people with those plans, they should probably stick with them.
For most others considering Apple’s plan versus the carriers’ plans is wise. However, everyone needs to do the math for themselves (or have a math wise friend help them if they are math deficient) as everyone’s needs and viable plans are different.
It saves the iPhone owner money too.
I have been following this program as I am interested in purchasing the iPhone 6S-Plus. Maybe it’s too early but I had some questions for which I can not locate answers:
– How long is the actual lease for? I had seen 24 months but … would it not need to be 12 months in order to upgrade every year (duhhh, I know, obvious huh ?).
– What is the rate of interest? I expect that I would have to pay an extra cost for this service but am trying to determine what the extra cost would be vs. paying outright.
If you know of a link somewhere that answers my questions, I have yet to locate it. Would you please post it here as a response to this message? Thanks 🙂
No it’s zero interest. After 12 months you can turn in your iPhone and get the next one OR you can keep the iPhone 6S/Plus you get now for the full two years of payments and then you own it. ZERO interest included AppleCare Plus.
Go to this site. Read it and all your upgrade questions will be answered.
http://www.apple.com/legal/sales-support/iphoneupgrade_us/
The 16 GB 6s appears to be $649 new without a plan. Including AppleCare for two years adds an extra $129, for a total of $778.
The Apple lease seems to be $32.45/month for 24 months or $778.8, which apparently includes AppleCare.
Truthfully, the website is not very clear, AppleCare doesn’t seem to be added to the price when you add it to the package.
The lease package is for 24 months. It is not clear that you get to keep your phone after that time. After 12 payments, you can get a free upgrade to Apple’s latest and greatest, but the contract is automatically extended an additional 12 months.
It also appears that you have to sign up with a carrier plan when you buy the phone. After that you can change carriers, but there may be some difficulties doing this if the carriers have locked in your SIM card.
I don’t see it as a lease since you have the option to keep the phone for the full two years of payments at which point you own it, so it’s more like a lease for 12 months with option to buy if you keep the phone for all 24 months. In any event, there’s no interest and it does bundle AppleCare Plus in the payments.
I think the confusing question is how long the ‘lease’ payments run:
You’re buying into a two-year program. You have to pay for at least two years. Every year, if you get a new iPhone, the payment plan RESETS and starts again. There are no lagging payments if you get a new iPhone each year. But you are again agreeing to a two-year payment plan.
IF/When you want to stop the plan, you must finish paying off the current two-year plan. The end. That’s it. You can ‘stop’ at any time, but keep in mind that you have to complete the current two-year plan payments. That’s the contract.
The one thing about is that is raises your monthly bill. I talked to someone in the Apple store and he also said it was an added cost. I have A T & T and they aren’t lowering my monthly bill because I decide to do Apples update program. I’m still doing it, but it would be nice if for once it went down, not up
You’ll be paying for your phone twice; once to Apple, for the leasing, and again to AT&T (if your plan includes subsidised pricing for the phone).
You need to switch yourself to their contract-free pre-paid plans ($40 for 1.5GB data, unlimited voice/text, and one-month rollover for data, or $55 for 4GB). Or switch to T-Mobile ($50 unlimited everything, with some throttling on data after exceeding 1GB).
These are both wrong. The AT&T plan gives you a discount if you lease a phone with them OR if you bring your own device. So this will not affect your AT&T monthly price. You will still get a discount since you are technically bringing your own device.
It increases the price because now you are paying $30+ per month for the phone plus the monthly cost of the plan. If I went with ATT bring your own plan, and apples, my bill goes up $37 per month. If I also do apples plan for my wife, that’s about $768 more per year.
Same if you went through AT&T Next.
Just be sure your carrier’s plan and bill reflects that you’re using YOUR OWN PHONE and you’re not still on a plan where you’re effectively paying for the carrier’s phone, aka the two-year plans that included a phone.
Cheap: Look into AT&T’s GoPhone plan. All you’re paying for is a minimum of $100 of phone service a year. You can pay quarterly. You bring your own phone of whatever type. You may have to buy a new SIM card from AT&T to fit your phone. You pay extra for added services beyond their basic service, such as messaging.
Oh and your unused phone service dollars roll over each year.
General clarification point- it’s called ‘iPhone Upgrade Program’ not “Update.”
In a nation of people who don’t mind being eternally in debt, this new program from Apple fits them. If the desire for the latest is overwhelming, then debt be damned, just do it. Apple isn’t doing it out of kindness, their doing it so they can own us. I for one choose to not succumb.
Even though 2 year carrier plans are the same thing. You can always opt out on Apple’s plan after a year, you aren’t shackled for all time to it. Either way you’re paying anyway unless you love using 3-4 year old phones.
Debt is about being ‘owned’ in every case. My sense these days is that the banks and various credit card providers want to make us ‘Indentured Servants’. It is remarkably similar to that old concept:
https://en.wikipedia.org/wiki/Indentured_servant
It’s a good idea to think about it that way. That Apple would like to ‘own’ us rather than let the phone carrier’s ‘own’ us is inevitable and a logical/smart move by Apple. Just consider the benefits of NOT being ‘owned’. I personally like those benefits, but financially, certain kinds of debt can make a lot of sense.
Example: Apple isn’t charging interest in their plan! Beat that, buying an unlocked iPhone on a credit card then paying the Interest! You can’t. Meanwhile, if you’ve got the cash on hand, buying an unlocked iPhone outright may make better sense to you, even though you lose AppleCare + the second year.
Maths.
From what I can tell: a new, unlocked 6s at 16 GB will cost $649. Add AppleCare for 2 years to get $778.
Leasing is $32.45/month. For 24 months that equals $778 also. It is not clear if you can keep your phone at the end of that time.
After 12 payments, you can upgrade to whatever Apple’s latest and greatest is. But your contract is automatically extended for an extra 12 months => 2 years from getting your new phone.
You have to pick a carrier when you purchase, but do not have to stick to that carrier. It may be tough switching though, as the carriers may lock the SIM to their network.
Their website is not very good at this. For example, AppleCare costs don’t seem to be added to the total when you add it.
Apologies for the double post, there seems to be a few minute lag before posts show up.
It’s crystal clear you DO OWN THE iPhone after 24 no interest payments.
That’s true, I was thinking about it as a lease, not as a term payment.
A few other thoughts:
If you trade in the phone after 12 months, you are accepting that the resale value of the phone is one-half the cost of new.
What happens if you trade in after, say, 15 months?
What happens if interest rates pick up? Will Apple start charging interest?
People will have to get rid of their carrier contract first.
Sent from my iPhone
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Done. and?
Just a quick “Thank You” to all of you folks who commented, posted ;inks, etc.
I am delighted that we were able to have a discussion on the facts of the matter without devolving into some sort of critique on our Government or on the sexual identity of some person or another.
Seriously, thank you all !
Lawrence
Don’t know why my previous comment didn’t get through but … thank you all for your thoughts, comments and the appropriate link, all of which have helped me determine what I will need to do if I want to go this route. In place of a $1,000.00+ expenditure, a NO interest loan would appear to be a no-brainer. Thanks again
Before the iPhone 6 my last iPhone was a 3G. If I get 5 years out of the 6 I will be happy…