Apple Inc. AAPL, at its keynote event on Sep 9, unveiled a smart upgrade plan for users, alongside the latest iPhone 6s and iPhone 6s Plus.
The iPhone maker has priced the new phones similar to the existing iPhone 6 (approx $649 for basic handsets) and iPhone 6 Plus ($749). Under a two-year installment plan, iPhone 6s and iPhone 6s Plus are available for $24 and $27, respectively for U.S.-based users who can buy the device from the Apple store, online or through national carriers and select resellers.
However, the company is also providing an alternative payment option under its new upgrade plan. The new plan can prove to be crucial in driving iPhone sales in the long run.
What’s the Upgrade Program?
The new plan will enable Apple users to get iPhone 6s and iPhone 6s Plus devices for a monthly payment of about $32 and $37, respectively for a two year interest-free period. Though this amounts to higher than the retail prices (at roughly $768 and $888 respectively), Apple is throwing in a few key features and services to compensate.
Users who avail this program will be entitled to upgrade their devices every year.
Also, the program includes the company’s warranty package - AppleCare+ for a 2-year period, which conventionally costs about $129.
Moreover, the devices sold under this plan will be unlocked, that is, users will have the option to choose (and even switch) carriers depending on the tariff and service packages available.
How Will This Impact Apple Users and Carriers?
The plan does seem a good idea for users who like to get a new phone every year. Moreover, the pricing is such that effectively they are paying only $20 more for the $129 AppleCare (though an insurance package is not much useful in the first year). Additionally, it provides flexibility to users.
Also, it does come as a relief for consumers when carriers like Verizon Communications Inc. VZ and Sprint Corp. S have removed smartphone subsidies from their plans, making the iPhone much more expensive. The new program will compel operators to offer competitively priced programs to attract and retain buyers.
In fact, T-Mobile and Sprint have already launched their own programs in an attempt to undercut Apple’s program. However, other big players like Verizon and AT&T T, despite having the largest number of iPhone users in the U.S., have not revealed their plans so far. We believe that they might not have to take much beating as a significant portion of their subscribers are under the corporate or family packages, which are less prone to change.