Apple’s $32 per month annual iPhone Upgrade Program is shaking carriers to the core

“Apple has set of a firestorm of activity in the cellular carrier space,” Mark Reschke writes for T-GAAP. “Apple’s $32 a month iPhone Upgrade Program has carriers in a panic, and for good reason.”

“For $32 a month, a new iPhone 6s can be had now, and every year, the latest and greatest iPhone can be had. All one needs to do is agree to continue the payment program for a 24 month period,” Reschke writes. “The reason carriers are busy countering Apple’s offer is simple. Apple’s program is about to turn carriers into dumb pipes, the likes we have not seen since the original iPhone. Apple uses unlocked iPhones. Thus, anyone signing up with Apple’s iPhone program can join month-to-month carrier programs, and jump ship to whomever they want, whenever they want.”

“Reaction to Apple’s lease program is already taking effect. One carrier allows you to get a new iPhone for $1 a month. Of course, there are all kinds of gotchas in these types programs. The devil, as is typical, lies largely in the details. Carriers are promoting some massive discounts to court users away from Apple’s simple $32/month plan. But the overarching trick is that while Apple’s iPhones are unlocked, the carrier iPhones provided in their discount plans are not,” Reschke writes. “And since this is a lease program, they are not going to unlock the iPhones as they technically own them, not the user. The carriers are pushing the fact many of their plan programs can be quit at any time without penalty, the customer is essentially stuck anyway, because they do not own the phone, the carrier isn’t going to unlock it for them and they are on the hook for the balance of the contract.”

Reschke writes, “The biggest fear for the carriers is millions of users uncovering the gotchas, and moving to Apple’s direct, unlocked, iPhone lease program.”

Read more in the full article here.

MacDailyNews Take: Good. Let ’em panic. We’ve been overpaying for years for these dumb pipes. It’s about time they were forced to compete for the cream of the crop iPhone customers.

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:
Sprint offers Apple’s iPhone 6s for $1 per month with trade-in – September 24, 2015
T-Mobile trade-in plan offers iPhone 6s from $5 per month – September 23, 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

37 Comments

  1. Okay, I’m confused. I thought the carriers didn’t want to subsidize Apple’s phones anymore. They came out and said just that many times.

    Analyst have been warning investors that Apple’s customers would stop buying the iPhone once the carriers stopped offering subsidized iPhones.

    Isn’t this what the carriers wanted?

    1. The carriers didn’t want to subsidize the phones, so they switched to installment payment plans that charged the customers for the phones but still locked them in to the carrier for the installment contract period. Win-win for the carrier.

      Having Apple in the market offering the same installment plan kills the carriers ability to lock in the customer. They will now have to compete for the same customer every month instead of every two years.

      The carrier CEOs really need to be fired for not anticipating this move by Apple when they changed their strategy and dropped subsidies. Of all the companies in the world, Apple could afford to finance their customer the lock them to APPLE.

    2. I got one last subsidy from ATT with a new 2-yr contract. $499 plus $83 sakes tax and a bogus $45 upgrade fee for a 128GB Space Gray iPhone 6S Plus. The good news is its on an overnight FedEx plane from texas to my home in Santa Cruz CA Friday morning. Was promised for October 16-23.😃💥🎉📱

  2. I am in the middle on my AT&T installment plan. I have been running the numbers of buying out the remaining payments, selling my phone and signing up with Apple’s plan.

    Every time I run the numbers, I think it comes out in my favor. I would rather give Apple my money then AT&T plus I can switch carriers if I want, when I want.

      1. It all depends on where you live. I am happy with AT&T here in Omaha. But traveling this summer, I was very frustrated. My brother’s cell service was able to hop between different cell providers. But he said his download speed isn’t as good as when he was with Verizon.

    1. Bingo! Lucky for us, we’ve reached the end of our contract with AT&T and are seriously considering taking advantage of Apple’s Upgrade Program and ditching AT&T’s plans. I’d feel much better about doing business with Apple regarding phone purchase / lease than dealing with the King of Dumb Pipes.

  3. I agree that it’s a good start and I do see this as a first step for Apple to eventually become a MVNO, but I still think it’s cheaper to wait a few months and buy one outright.

          1. Just curious if you’ve done this yourself. PAYG SIM cards are great for getting you local phone and data access, but there is a minor hassle of not receiving texts in the meantime, any visual voicemails you had saved on the phone are erased (at least it did for me), etc.

            The benefits greatly outweigh these minor hassles, of course, just pointing them out.

            1. Yes Mossman, I’ve ised an u locked phone trvelling abroad since iPhone 4. i had a freind in Europe purchase my first unlocked phone and send it here becuase they were not available here for a long while.

              My last 3 iPhones have been purchased unlocked here because of extortive AT&T roaming fees. I travel abroad frequently and refuse to pay these or jailbreak my phone to accomodate my needs. Most celco s in Europe have pay as you go plans that sell you i dependent sims, the rates are slightly hogher than standard local fees but very reasonable compared to roaming charges. They are available at drug stores, news stands and almost everywhere and allow refilling your minutes on the fly with a credit card.

              If you need the freedom you deserve as a user, and the carriers want to dictate otherwise, fucke ’em and buy the phone unlcked, as much as it costs, it’s a thousand times cheaper than extortive roaming charges.

            2. I have to agree – even the odd trip can add up. Was in Peru this month and the last hotel we were at had poor Wifi. So ended up exceeding my roaming data allocation. Cost $60 for 2 phones with 120MB data plus $60 overage.
              I do have an older iPhone that is unlocked and used that for a trip to the UK. The SIM cost 20 UKP and had a pretty generous usage.
              So this has made up my mind that the next iPhone I get will be unlocked and will get SIMs when I travel.
              Plus the added advantage is that I can switch providers if I want. My daughters phone will be changed out first and then I will do ours in the Spring once the existing contract expires.

    1. $32/mo is exactly what you pay for carrier financing plans…

      Well, a little more because the carrier plans don’t include AppleCare+ for the accidential damage protection…

      Even the Samsung Galaxy phones cost as much as the iPhones

  4. From environment perspective it does not look good. Recycling perfectly working devices every year… I believe I read from somewhere that tons of water is wasted ony to create one microchip. Please argue, I need arguments from both sides as I do not want to know more. Thnank you!

      1. Water used to create a microchip is returned to the earth when they are done using it. It is not destroyed or obliterated from the planet. It is a renewable resource.

        If you are troubled by water use and perceived waste, take a look at the city of Scottsdale AZ.
        http://www.scottsdaleaz.gov/water/water-supply#rw

        This city sits in the middle of a desert, and yet they have some of the lushest green golf courses in the world. Not only that, but there are hundreds of them in the county. Not only that, but almost every home in the county has a secondary water system for lawn and garden irrigation!

        I believe the per capita water usage is the highest in the country. How does such an arid region have so much water??

        They have a plan. An engineered plan, made by mechanical engineers and civil engineers. They manage their water resources quite well, unlike other cities,states or countries for that matter.

        To say that industry or humans abuse water supplies is asinine. On this planet, water is ubiquitous. If a region or country or town does not have enough, it’s not an environmental problem, it’s a control issue.

        1. It’s not *quite* that simple. Water used in chip manufacturing can’t just be used straight from the utility, nor can it be returned to the earth without treatment.

          “For every dollar a fab spends on utility-supplied water, $20 is spent treating it to a ultrapure quality, and another $10 is spent to [treat the discharge to acceptable levels].”

          https://engineeredenvironment.tumblr.com/post/30464844411/water-use-in-the-semiconductor-manufacturing

          They do not re-use that water to make more ultra-pure water, which suggests the discharge is not even utility-grade, drinkable water.

          So while it’s not “wasted” in the strict sense that it’s gone forever, it is in the same way that product packaging can be “wasteful” even if it all serves a purpose (catch the buyer’s eye, protect during shipping, etc) and all of it can be recycled.

    1. In my experience, “recycle” means something different in the iPhone marketplace – the demand hardly lessens for iPhone within the last three generations, it merely changes based on affordability, cachet and utility. So an iPhone 5s doesn’t go into landfill; it gets sold, passed along or traded in (to be resold). In a family, I tend to see 3 or 4 generations of iPhone in satisfied use. I’ll give an example close to me: mother has 5s, father has 6, working daughter has 6 (and her husband is about to give up his 6 and get the 6s), college daughter has a 5c, middle school son has a 4s, resident college cousin has a 6+. Whenever I see iPhones in a family, I see this type of distribution: someone likes the latest and greatest, a couple of people disdain most of the “bells and whistles” and go with utilitarian usage, somebody’s got older top-of-the-storage unit, a couple have almost fashion accessory style models — and there’re a lot of pass-along, hand-over, hand-me-down transactions. Recycling happens to the units that can no longer be used viably within Apple’s ecosystem, like an iPhone 3 (or a Sprint CDMA iPhone 4 in a family that’s by and large moved on to T-Mobile).

  5. Personally i think this is great news for the customers in the USA. Finally someone big enough to disrupt the market place and hopefully provide you lot with better service & value for your money.

    I pray it works and that Apple bring it over here to the UK.

    Mobile Carriers need to understand that they are nothing more than a service and that they need to be competitive or get washed into the sea of used to be companies (like nokia, palm, microsoft etc).

    Oh and rasmus, I’m betting the phones returned to apple will be serviced and sold as / provided as refurb’d / warranty replacements.

  6. All the carriers have to do is say you have be with us for a year or two for discounted service, if not you’ll pay a higher price. Once one has the nerve to do it, the rest will follow. You only have 2 places to go for the best service.

  7. I just calculated what it would cost if I renewed my 2 year contract with ATT, and got 3 new phones that way or went with month to month, and got 3 new phones through the apple program. doing it the latter way would cost me +$70 more a month (not including taxes) so potentially for a family plan with 3 or more phones the Apple program would be more expensive. Unless you have the need to go international, or want to transfer your service at a whim, it does not seem economical. Guess I have to stick with the subsidy plan.

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