Apple Makes Large Bet on New iPhone Upgrade Program

iphone upgrade program.jpg

During their “Hey Siri” media event last week, Apple announced a new program called Apple Upgrade Program that allows customers to “lease” an iPhone.

The new financial plan will continue to get consumers to pay up for the company’s smartphones, which will continue to drive the stock higher. After the media event, Apple’s stock prices have been up for days, up 19 cents today to $116.42.

The financing option would give customers the option to pay $32 per month for a 16GB iPhone 6s, and with that they get a warranty and the ability to upgrade their device yearly. The program lets customers sign up for a payment plan, much like a car lease, that would get them to pay $650 for a smartphone anyways. The strategy is a big win for Apple, especially when we are in an era in which smartphone prices are continuously falling.

Analysts agree that if Apple is successful in convincing customers to sign up for the new program, the company’s stock could be worth $200 a share. The financial impact of this program is huge, and it could give Apple a market value of $1.1 trillion.

The Apple Upgrade Program is also a threat to wireless carriers, who currently have a lock on iPhone customers. Currently wireless carriers are in the position to control pricing, however, the move could displace the carriers’ role in the transaction.

While the Apple Upgrade Program is currently U.S. only, the big three Canadian carriers have shut down the idea of the program coming to Canada anytime soon. Yesterday, the largest Canadian wireless carriers, including Rogers, Bell, and Telus, said that these instalment / leasing plans aren’t coming to Canada anytime soon.

[via USA Today]

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  • I think the plan is a great idea… and for people who like to change every year, it’S great… It remove the hassle to try to sell the device the next year!

  • Alexandre Forget

    I hope this upgrade program will come soon to Canada !!!

  • Alan Yau

    The carriers may have shut it down as an option for them, but I think that makes it an even better opportunity for Apple since they wouldn’t have any competition from the carriers for leasing. I think it would be cost neutral for someone like me that upgrades every year. You could be off contract and get a BYOD discount or those that are on old retention plans could keep them and upgrade.

    If Apple did this in Canada…the carriers would be in trouble since we could all just move around to the cheapest plan with no concerns about minimum plan values to qualify for a premium device.

  • Alexandre Forget

    But Apple do it in USA with Citizens Bank, so they need to find a bank here to do the same.

  • Alan Yau

    I’m sure they could convince one of the second-tier banks to support the program here. Lots of finance companies would probably want to do business with Apple, if the big banks didn’t want a piece of the action.

  • BCEd

    “The Apple Upgrade Program is also a treat to wireless carriers.”

    I think you mean *threat*?

  • FragilityG4

    “the company’s stock could be work $200 a share”

    I believe that is suppose to be ‘worth’

  • Shameer Mulji

    Amen to that! I’ll be on that like white on rice.

  • Thanks, fixed.

  • Eastvanfan

    I think this was an option that was going to come eventually by Apple and I believe that the carriers aren’t happy and could cause them to re-think their technology upgrade cycles. My reasoning is that imagine if you’re a Rogers and your biggest revenue source is wireless data and you’re using that revenue to fuel the move from 4G to 5g, etc but now your iPhone customers aren’t buying from you anymore, why would you as Rogers continue to upgrade your wireless networks as fast if the risk is going up since the upgrade cycle for smartphones has slowed down. This follows the same pattern of buying computers and laptops and tablets saturation. The companies might wait longer to upgrade the network until the data revenue has paid for enough of the capital network upgrade.

  • Salinger

    The Canadian carriers haven’t shut down the idea of the program coming to Canada, because they can’t. This is an initiative direct from the manufacturer (Apple) to consumers.

    What they’ve “shut down” is the idea of copying US carriers EIP’s.