Apple Announces iPhone Upgrade Program for Annual iPhone Purchasers

[McGiord]

I'm not sure if you're familiar with how the accidental protection warranties that the US carriers sell work, but replacing a phone through one of them usually involves a fee of $200+. So AppleCare+'s $99 replacement fee is about half that.

The carriers usually charge $8-$10/month for the service, too. Apple's bundling it in with the monthly device cost, and that cost is coming out less than AT&T's monthly device cost for just the device <no insurance>.

Is Apple doing this to make money? Duh, that's what companies do. Is Apple being tricky about it? Seems to me they have the easiest to read descriptions of the plans -- I don't see anything tricky about it. And if Apple was trying to milk money out of people just for the sake of it, they're dumb for not raising their rates.

My point is that Apple is getting into this line of business of charging for unnecessary services is something I personally don't like at all. An iPhone should work well during its lifetime, and be robust enough to withstand regular use. Paying extra to cover something that you plan to return or replace within the warranty period is the foundation of service fees that people get use to pay and rise the incentives for companies to develop subpar quality products therefore they justify selling these "protection" plans. Terrible business practice that I despise.

 

[McGiord]

Why do people keep saying "lease"? It's financing, you are purchasing the phone but paying it in installments. No you don't own the phone until the 24th payment, but I don't own my house or car until the last payment either, but I'm not leasing them. I suppose it's financing with an option to trade in.

Would you get any credit towards the new phone??? Let say you paid 15 installments out of the 24, then what will happen??

 

[aristobrat]

My point is that Apple is getting into this line of business of charging for unnecessary services is something I personally don't like at all. An iPhone should work well during its lifetime, and be robust enough to withstand regular use. Paying extra to cover something that you plan to return or replace within the warranty period is the foundation of service fees that people get use to pay and rise the incentives for companies to develop subpar quality products therefore they justify selling these "protection" plans. Terrible business practice that I despise.

This is the AppleCare+ plan. The incentive for most on this plan is that it covers ACCIDENTAL damage caused by the owner.

For people who upgrade yearly, the included free AppleCare (no +) covers all manufactures defects. Repairs under this warranty are free.

 

[spinedoc77]

Would you get any credit towards the new phone??? Let say you paid 15 installments out of the 24, then what will happen??

Well then you can pay off the remainder of the phone and own it, you've already paid 15 installments so only would pay 5 more just like a car, then you could turn around and sell it if you wanted to.

 

[McGiord]

This is the AppleCare+ plan. The incentive for most on this plan is that it covers ACCIDENTAL damage caused by the owner.

The flat fee to repair it may be a better deal, or just buying a new one instead. When the accident happens is key to determine if it makes sense or not, it's really an insurance that you don't need. The design should be robust enough that it will get damaged when it is really abused no by simple use and accidental drops every now and then, as well as waterproof. If the iPhone waterproof now?

 

[bradl]

ATT next for a 64gb iPhone 6+ is 42.45 not 47.75, unless I'm missing something or are you adding insurance?

Neither. Im basing it on the 6s, not the 6s+ those are 42.45 for the 128GB model.

For me the plus is the included Apple Care. The carriers warranties are junk, $12+ / month and their deductibles are what, like $275 or so, just crazy. Even squaretrade is about the same price as apple, and you still have to send the phone in the mail and wait for it to come back. Also what's the $129 you add on?

If I remember correctly, getting NEXT through ATT doesn't include AppleCare+, so that is the extra $129 being tacked on at the end of the total cost of the monthly payments. The Apple Upgrade Program includes AppleCare+ in the bill - or at least that's how I heard it during the keynote.

AppleCare+ and having an unlocked phone is the plus for me. It wouldn't be available for unlocking from ATT until the entire phone is paid off.

BL.

 

[jbachandouris]

The thing no one is mentioning is how loose Citizens Bank will be with their credit. Some buyers will have no choice but to stick with their carrier as a credit check won't be run.

 

[aristobrat]

The flat fee to repair it may be a better deal, or just buying a new one instead. When the accident happens is key to determine if it makes sense or not, it's really an insurance that you don't need. The design should be robust enough that it will get damaged when it is really abused no by simple use and accidental drops every now and then, as well as waterproof. If the iPhone waterproof now?

No, the iPhone is not waterproof. A few drops now and then is likely fine. Accidentally spill a drink on it and it's likely not fine.

To me, the deal is that paying monthly for your phone through Apple (which includes AppleCare+) costs a little less than paying for your device monthly through ATT (which does not include AppleCare+).

IMO, that makes the Apple deal a better value regardless of if you plan to make use of the included accidental damage warranty or not.

 

[tennisproha]

Yes, that's what I'm trying to figure out. That's what I've done in the past after unlocking it. Whenever I hear about a new lease plan I always dismiss it because I know it ends up costing more.

Yeah. The resale values are pretty darn good for iPhones so it makes more sense to me to do it this way. Do you mind sharing what kind of prices you've gotten for what models in the past? I read somewhere that starting about a month before the keynote, the previous model depreciates about 20%.

 

[aristobrat]

Whenever I hear about a new lease plan I always dismiss it because I know it ends up costing more.

They're not leases, they're simply 0% APR finance contrasts that have the option to upgrade before you've paid off the contract.

There are people that are paying off the contract on month #12 (which allows them to start a new plan to get a new phone), and then sell the old phone on eBay/Craigslist for whatever they can get for it (which is the gamble).

There's no extra cost.

 

[Gjwilly]

It's also better to use squaretrade in terms of your post because you can cancel your plan and you get money back which is prorated, where with apple you don't get anything back.

Apple has given prorated refunds on AppleCare+ for as long as I can remember.

 

[Apple a Day]

This is what I'd like to know. Also, it says $37.49 for a 6S Plus 16GB, so if you do a year, that's only $449.88 for the year. Buying it outright would be $749, so a $300 difference. That's about what you'd get on eBay, give or take $50, and you get AppleCare plus. If this is how it works, I'm all in. ONLY if I can keep my current plan ($45/month w/ 250 MB data).

I thought the same as you but then on Apple's website the fine print says:

1. 
   1. The iPhone Upgrade Program is available to qualified customers only with a valid U.S. personal credit card. Requires a 24-month installment loan with Citizens Bank, N.A. and iPhone activation with a national carrier — AT&T, Sprint, T-Mobile, or Verizon. Full terms apply.

I believe the contract requires 24 monthly payments which doubles your $449.88. Maybe I'm wrong but I think it's too good to be true.

 

[HalfNelson]

The $40 AT&T charges has nothing to do with what phone you have. That is basically the charge for having your phone #. That is why it is another $40 if you added another line. The $15-$25 discount is strictly off of that $40 charge and also has nothing to do with what phone you have. The discount simply reflects wether or not you are still contractually obligated to the carrier. The next plan doesn't contractually force you to remain with your carrier, it is just the name of the way you have chosen to pay for your phone. You are free and clear to go to another carrier, you just have to settle up with paying for your phone.

Imagine working for a company who bought you a new car every 2 years with the caveat that you had to work for that company for the next 2 years. Now, the company doesn't do that; you are free to work wherever you want, but the company will not be providing you your car you have to buy that yourself. You can go out and spend your savings on buying a car outright, or you can have the company you work for finance the car for you. Letting them finance the car for you doesn't lock you into working for the company for a set amount of time, it locks you into paying for the car. If you want to go work for another company you can. You can even take your car with you. You just have to pay it off first.

Subsidized phone purchases have been so ingrained, that now that carriers, and Apple are trying to simplify things, people are way overthinking the process of buying a phone.

 

[eww7633]

This is an excellent point, certainly it's a trap many fall into. I usually sell my phones so it's a selling point, although I don't get all the value of course. It's also better to use squaretrade in terms of your post because you can cancel your plan and you get money back which is prorated, where with apple you don't get anything back.

Seeing the awesome resale value of the iPhone I'll bet it's still better to sell it. Heck a 16gb 6+ is still averaging around $500 on swappa and that's after the 6s+ announcement. So if I paid $749 for it and sold it for $500 then I'm paying $249/12=$20.75 for that year of use. Although realistically tack on another $15 for shipping and swappas $10 fee, but still better than the carrier or apple.

You can definitely, and I say this with 100% certainty, get a prorated refund on AppleCare+. Just call and ask for Agreement Administration and they can process that refund for you.

 

[skwash]

It's disengenuous to say this isn't a lease program. Because it is.

In order to get a new iPhone every year, you need to turn in the existing phone. When buying a new phone, you pay little to nothing up-front, but as trade off, you pay an affordable monthly fee to lease the latest phone; insurance (AppleCare) is also required during the financing period. Sound familiar?

That's because it follows the exact same model (and purpose) that leasing a car does.

So what if you have the option to buy at the end of the lease period. That's EXACTLY how a car lease works. With a car lease, you also have the option to purchase the car (to own) at the end of a lease. Same thing.

At the end of the day who cares? So what if it's a lease? The leasing model works best for the smartphone industry because people upgrade so often.

So if you get a car loan, and trade it in before you've paid off your car, then the loan was a lease and not a loan? They aren't giving you the option to buy the phone at the end (like a lease), they are financing the phone for 24mo, with the option to trade it in after 12mo just like a loan on a car.

 

[reden]

This is actually a great program compared to a program like Tmobile's JUMP, which is what I currently have. It is obviously a leasing program, and I find that more enticing because you're technically paying the depreciation of the device, which is fine by me considering what I have to spend with T-mobile. I'm technically on a lease program with them, because I always upgrade to a new iPhone, and I don't care to keep the old ones either. To break it down is simple:

I'm currently paying $10 a month plus my $27 a month for my iPhone 6 128GB. Not only that, I had to drop $200 plus taxes, activation etc with T-mobile to startup my plan last year.

With this program it appears you don't drop any down payment, it's all built into the monthly fee. Additionally, Apple's Applecare+ is much better than Tmobile Jump's insurance. If I break my iPhone with Tmobile, I have a minimum $175 deductible to pay for an incident, whereas with Applecare, it's only $79 per incident.

Essentially, if I get the iPhone 6S 128GB I only pay, $42.45/month, that's $509.40 for the year to lease the device. If I break it, that would cost me an additional $79 to replace it, that equals $588.40.

If I go with Tmobile's Jump program (which to be honest is a lease program in disguise), I pay $200 upfront for a 128GB iPhone, plus $27 a month for the installment, plus $10 a month for JUMP, totaling: $644 for the year ($134.60 more than Apple's new leasing program). If I break the iPhone once in the year, and get a replacement, it's a $175 deductible with Assurant (Tmobile's guys that handle the claims), totaling me $819.00 for the year ($231 more than Apple).

In addition from what it looks like with Apple, you can walk away from the device when you end your year lease, with T-mobile you must pay the rest of the phone if you choose to do that, and now you have to sell it yourself to cover that cost. This is a no brainer, granted Apple is not going to ask for down payments which I HIGHLY doubt since they don't mention it anywhere in their copy.

 

[randian]

If I break my iPhone with Tmobile, I have a minimum $175 deductible to pay for an incident, whereas with Applecare, it's only $79 per incident.

New terms are $99 per incident for a 6S/S+.

 

[Whiteknight55]

I have the UDP too. If you're game plan is to get a new iPhone and then use it for 2 years (or more), then you are far better off paying the subsidized price (which is $449 less than buying the phone outright) and entering into a 2-yr contract. At the end of the 2 years, sell the iPhone and do it all over again. It is far more financially advantageous this way. However, if you don't have the grandfathered UDP and/or you have the desire to upgrade every year, then yes, it is a better deal to go with Apple's monthly payment plan.

I have an old UDP and currently upgrade my phone every year and give my wife my old phone then resell her current phone. She is on a $30/mo 3GB data plan and we average around 8GB usage/mo combined. The voice portion is shared and we never use our allotted minutes, which are the lowest available, and we pay around $145/mo total for both lines. $20 of that is a text plan for me on top of the voice and data.

I'm usually able to get $275-$350 for the two year old phone and pay $399 to get the new subsidized phone. Effectively, it costs me $4-$11 per month ($50/12 mo - $125/12 mo) to always have the latest phone and have my wife with the second latest. As far as I see it there's no reason for me to consider Next or Apple's new program as long as ATT continues to offer subsidized 24-mo contract phones. Am I missing anything?

 

[Rocketman]

So if you pay for 12 months but keep your phone 2-3 years, are there zero payments in the out years? As I understand it you have paid for Applecare+ which is 2 years so that should continue, right?

If you go to Apple to install a Verizon or ATT plan, they capture the retail margin on that service so that seems to be some sort of partially reverse subsidized offer.

Rocketman

 

[scapegoat81]

Looks like Apple & the carrier are trying to get everyone in the USA on a lease model. It would be nice to see refurbished year old iphone sold directly by apple at a discount like we see with iPad models. Where are all of these 1-year old phones going?

I think you answered your own question. They'll prob sell them at a discounted price the following year to offset profits of nixing the 16gb models next year lol

 

[chicagoiqbal]

The way I see it, if I go with the Apple Upgrade Plan, I will have no commitments to any carriers (i.e. I can switch from AT&T to Sprint or Verizon if I feel like I'm getting a better deal on my monthly service). This is different than today where AT&T locks me in for a 2-year contract. So assuming the general cost is the same this seems like a better deal especially given the opportunity to upgrade my iPhone every 12-months and includes AppleCare. Am I missing anything here?

 

[aristobrat]

It's disengenuous to say this isn't a lease program. Because it is.

Apple's fine print for their Yearly Upgrade program notes "Requires a 24-month installment agreement", which is exactly how AT&T's runs their Next program.

At no point during AT&T's Next program are you ever required to return your iPhone. Not in the beginning. Not in the middle. Not at the end.

With a lease, you are required to return the item at the end of the lease.

In order to get a new iPhone every year, you need to turn in the existing phone.

Not true.

In order to get a new iPhone every year, you need to pay off your installment agreement.

There are two options for doing that:

1. Pay off the remaining balance (like you would with any other bill that you receive) and keep your existing phone.
2. Turn in your existing phone.

 

[PinkyMacGodess]

So is this for a LEASE or do you OWN your iPhones??

I'm having a hard time with the idea that this is anything better than subsidized phones. Either way, you are paying for a device you don't 'own'.

 

[TonyC28]

I see this as something of a hybrid lease/loan. Our main problem is we are conditioned to think of phones as something way cheaper than they are because of the way carriers have subsidized them. If you think of it is a product that you are in no way obligated to replace every year then this all seems silly. You would just buy it and pay for it like anything else. You wouldn't compare it to a car lease/purchase like so many are doing here. It's just a widget that we happen to like replacing every year. I haven't run the numbers to compare Apple's plan to those of the major carriers but I can see the appeal of Apple's. If I can pay $37 (rounding up) a month for a 64GB iPhone 6S and then next year hand it to Apple and get a 64GB iPhone 7 and keep paying the same $37 a month then that's a good deal to me. Over the course of three years I would pay Apple $1332 for $2426 worth of phones (assuming 3 iPhones at $749 each plus 8% sales tax). If I paid for the phones myself and sold them on my own I wouldn't fare a whole lot better. If I got an average of $400 for each phone sold I would only do better than paying Apple by about $100 over the three years. The one thing I don't like about this is the mandatory AppleCare. If I am on a "plan" that is designed to get me a new iPhone every year why would I want a mandatory service plan that covers me for the second year of owning a phone that I won't have anymore? Or maybe I'm missing something about AppleCare.

 

[aristobrat]

I'm having a hard time with the idea that this is anything better than subsidized phones. Either way, you are paying for a device you don't 'own'.

If you use a credit card to pay at the grocery store, do you worry about if you 'own' those groceries (or not) before your credit card balance is entirely paid off?

To me, it takes about 10 minutes worth of work (either on paper, or in a spreadsheet) to figure out the total cost of buying with a subsidy, or buying with a device installment plan. Then you know what's going to cost you least. In some cases, the subsidy is cheaper. In other cases, the device installment plan in cheaper.

I don't get what's hard about that, or why the concept of 'ownership' is suddenly important to some folks, when IMO nothing's really changed with it (in terms of phones).