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Sprint Stops Offering Two-Year Phone Contracts
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You can pay full price for a phone... or you can use a monthly payment to pay for a phone. Either way... you know exactly how much you're paying for the phone.
With the old "subsidy" model... the phone payment was hidden inside... and you kept paying for the phone even after the two years was up. Your bill never went down after the phone was paid for.
That's why people almost always upgraded after two years. Why would you keep paying for a phone that was already paid for?
There are so many mistakes in your logic, I don't know where to start. At least do a fair A/B comparison--in your subsidy example, you are keeping the phone for two years and then selling it, right? In your "new scheme" why aren't you keeping the phone for two years, after which you've made all the payments and also OWN the phone, allowing you to sell it? In the "new scheme", your monthly plan cost will be lower, also, because the carrier isn't including the subsidy.
I think you've just never realized you were paying a higher monthly plan cost when paying $199 for a phone compared to either bringing your own (a used phone) or paying for one on the installment plan (basically a 24 month 0% interest loan).
Look around...plan prices are getting lower and data packages are on the rise. I have 6 phones on AT&T with 20GB data, unltd talk/text and rollover data and pay about $190/mo. Not "absolute crap" to me!
Who cares about unveiling the truth. The real TRUTH is as these carries put a demise to contracts we as consumers won't have any choice but to pay full price upfront if we want an iPhone. And yes, before you reply back saying that subsidizing the iPhone meant I still ended up paying more for it later or I can do installment billing when I buy my next iPhone. Yeah, I know all about that.
I've stopped playing the phone game. I'd rather save the $800+/year and upgrade my computer every couple years. I'm back to a "dumb" phone and just use my iPhone as an iPod Touch with calling features (google voice/facetime) and GPS. I don't talk much anyway. I won't ever buy a "phone" again. it will have to be like an iPod Touch, or some device, where I only can buy data, nothing to do with a phone. I'll do everything VOIP on it however. No hefty cell plans. I may be waiting a long time, but I'll wait. I tried it with an iPad mini before, and used that as a phone. Little too big to carry around, but something may come along again.
I have a feeling that a few million people will become accustomed to upgrading a little less often than 1 or 2 years from now on.
I get what your saying. But with this new setup, My bill is going up by $20 a month, not down.
autrefois
macrumors 65816
If nothing else, this will end the, "You're paying for it anyway, so you might as well take the upgrade," scenario.
There was also a thriving resale market that had to be crushed...
There was also a thriving resale market that had to be crushed...
The good thing is... people don't HAVE to pay $649 before they walk out of the store.
They will continue to pay a monthly phone payment along with a monthly service payment. Just like they always have.
At least now it's more clear what they're paying for.
I agree that $649 is a much bigger number than $199... but most people never paid the full $649 up-front anyway. Did you? I didn't.
So I'm not seeing how this supposed "sticker shock" will be as big a problem as you're making it out to be
I never said it was a big problem. I just said I was interested to see what it meant for the price. As in will Apple try to push say a 599 as a price point like they do 499 for an iPad or 199 for an iPod, or will they price it so the starting monthly payments look attractive on paper. So I'm not seeing why you think I'm making it out to be a big problem. Because I don't. Lol. I do think it will cause some confusion for those people who don't like change and have clinged to contracts thinking they're getting an iPhone for 199 though.
If AT&T's native network is good in his area, then he has service. It's a wholly owned subsidiary of AT&T.
For now, Verizon customers can do 2-year contracts but its not really advertised anymore. I really hope they keep it as a option for those that want it. My monthly bill the same in a contract or not but the difference is I'm not paying extra $22/month for my phone. Verizon not cutting my service price by $22 thats for sure.
I don't think it will cause confusion either.
The $649 price was never front-and-center. Most people never paid $649 anyway.
Most people paid $199 down. Then each month there was some unknown amount for the phone and then the rest was for service.
Now they'll know they're paying $27.08 per month for the phone... and the rest of their bill is for service.
Yes it's different... but it's the way all carriers are going now. They'll have to learn it sometime.
You make it sound as if Apple being premium is a secret. Those premium prices pay for premium service via AppleCare and Genius Bars around the world. Those premium prices pay for premium hardware and software experiences. Those premium prices pay for retaining premium talent at Apple. Those premium prices allow Apple to bankroll expensive new endeavors. And those premium prices allow Apple to do just fine even through economically tough seasons.
So let that truth be broadcast far and wide—Apple makes premium products at premium prices.
Yup, I think lots of people will upgrade less often just to save 30$ a month. When it is time to upgrade, some people might just get a used iPhone or a cheaper android. There is more an incentive to save now and it might hurt Samsung and Apple. For me personally, I just picked up another brand new LG g3 from my carrier for $75USD. For $24 USD a month i get my unlimited calling/text and 2GB of data and I'm happy.
Cricket Wireless reminds me of Skinny in New Zealand which is owned by Spark - Spark's prepaid has free Spotify and a few other goodies where as Skinny is the 'bare basic, stripped down cell service" which has no frills but all the benefits of coverage. It'll be interesting to see whether we see something akin to BigPipe appear in the US which is also owned by Spark which offers naked broadband, all technical support is via Twitter, Facebook and email - around $20 cheaper when compared to others because it removes all the frills. For many out there the price is too high because we're forced to pay for things we don't want or need as part of the service so it makes sense for established players to tap into that market and as this generation is a lot more comfortable using Twitter, Facebook and email it makes sense to offer them alternatives.
In Germany you have had the choice for a long time: Expensive contract with subsidy or cheap contract / prepaid without subsidy.
The cheap contract was usally the cheaper option, because you can get out quickly if someone else offers cheaper prices or more minutes / texts / data volume for the same price. In a highly competive market with many low cost MVNOs this saved lots of money for me.
Remember: A phone is just a consumer good. If someone cannot afford it upfront, they should go for something less expensive. Its not a car or a house.
Christian
The cheap contract was usally the cheaper option, because you can get out quickly if someone else offers cheaper prices or more minutes / texts / data volume for the same price. In a highly competive market with many low cost MVNOs this saved lots of money for me.
Remember: A phone is just a consumer good. If someone cannot afford it upfront, they should go for something less expensive. Its not a car or a house.
Christian
It's always interesting how when people see one of the carriers ending contracts some assume that knowing the true $649 price is somehow going to hurt Apple. On the contrary, this just makes it easier for Apple to sell even more Iphones.
Now instead of advertising the iPhone for $199, Apple can advertise them for $0 upfront with an asterisk about the monthly payment. This is America and the vast majority don't care how much the product costs over two years, they only care how much it costs right now to walk out the door with one. That price is now going to be $0 plus sales tax on all carriers. Lovely for Apple.
For an example of how this is already proven true, look no further than T-Mobile. They've been doing this for almost 3 years now and yet the iPhone is easily their best selling device despite consumers seeing the $649 price. "$0" is great advertising.
Now the other reason why Apple will sell more iPhones than ever is because these carrier financing plans give customers the flexibility to easily upgrade every year rather than wait the full two years. With the two year subsidy one had to pay full retail to upgrade after only a year, now pretty much every carrier offers some type of trade in program where you can give them your old iPhone and repeat the $0 financing cycle with the latest model all over again.
For me personally I can usually get around $450 for my year old iPhone when the new one comes out. That $450 is enough to cover the remaining balance owed to the carrier on the device, allowing me to upgrade each year at $0 down as well for those who like to sell their phones themselves.
Don't be surprised when we see "iPhone 7 is the best selling iPhone ever" later this year.
Now instead of advertising the iPhone for $199, Apple can advertise them for $0 upfront with an asterisk about the monthly payment. This is America and the vast majority don't care how much the product costs over two years, they only care how much it costs right now to walk out the door with one. That price is now going to be $0 plus sales tax on all carriers. Lovely for Apple.
For an example of how this is already proven true, look no further than T-Mobile. They've been doing this for almost 3 years now and yet the iPhone is easily their best selling device despite consumers seeing the $649 price. "$0" is great advertising.
Now the other reason why Apple will sell more iPhones than ever is because these carrier financing plans give customers the flexibility to easily upgrade every year rather than wait the full two years. With the two year subsidy one had to pay full retail to upgrade after only a year, now pretty much every carrier offers some type of trade in program where you can give them your old iPhone and repeat the $0 financing cycle with the latest model all over again.
For me personally I can usually get around $450 for my year old iPhone when the new one comes out. That $450 is enough to cover the remaining balance owed to the carrier on the device, allowing me to upgrade each year at $0 down as well for those who like to sell their phones themselves.
Don't be surprised when we see "iPhone 7 is the best selling iPhone ever" later this year.
Yes, but if you go into an actual Verizon store, the commission-based associates will tell you otherwise. Go into Best Buy and as long as you are an existing customer with Verizon under an existing 2 year contract, then yes.
Apple was surely seeing this trend begin and became nervous. The next iPhone they will probably advertise their payment plan price rather the outright price.