To what extent do you think lack of 2 year subsidy will impact US iPhone sales?

Discussion in 'iPhone' started by thadoggfather, Jan 17, 2016.

  1. thadoggfather Suspended

    thadoggfather

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    #1
    Thinking more for iphone7 for people who don't even realize they've gone away period.

    A lot of Americans tend to think 199 is the price of a phone,
     
  2. chabig macrumors 68040

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    #2
    I don't think it will change anything at all. The "subsidy" was nothing more than a hidden installment plan rolled into the price of your contract. Americans are plenty familiar with installment plans, and every carrier has their own spin on one, which is now transparent because it's separate from the service plan. There is also Apple's iPhone plan. My 64GB 6S Plus costs $41/mo interest free instead of $900 up front. That's very palatable to most people.
     
  3. Applejuiced macrumors Westmere

    Applejuiced

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    #3
    I think eventually the prices of new smartphones will drop and the used market will also take off.
     
  4. Newtons Apple macrumors Pentium

    Newtons Apple

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    #4
    For those who are tighter on money, they might skip a upgrade. Other, it will make no difference what so ever.
    --- Post Merged, Jan 17, 2016 ---
    For those who are tighter on money, they might skip a upgrade. Other, it will make no difference what so ever.
     
  5. thadoggfather thread starter Suspended

    thadoggfather

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    #5
    I hope so. 850+tax for a 64gig phablet gets increasingly ridiculous to me

    Way worse in a lot of other countries too, easily like over 1000 bucks in Uk iirc
     
  6. Givmeabrek macrumors 68030

    Givmeabrek

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    #6
    No effect. The Next plan, and the other time payment plans give you a phone for free! At least the people that thought phones are $200 think that. :)
     
  7. nightcap965 macrumors 6502a

    nightcap965

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    #7
    Phones will be held longer, the two year upgrade cycle is no longer assured. Since the platform is maturing, this is not necessarily a bad thing.
     
  8. I7guy macrumors G5

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    #8
    This affects the entire US market. What price do flagship htc and Samsung phones release at? Only time will tell if people use Apple financing more and more.
     
  9. bufffilm macrumors 68040

    bufffilm

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    #9
    +1

    There will be those who upgrade every year or every two years as usual , but I think you will also see more people holding onto their phones longer. (Wouldn't surprise me any if people buy the 6s instead of the 7 in Oct...it will be $100 less)

    But I don't think you see will see Apple lowering prices...maybe in India like they did recently, but not here in the US, UK etc.
     
  10. Andres Cantu macrumors 68030

    Andres Cantu

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    #10
    I think it will have little to no effect. While some people will complain that the phone is no longer subsidized, others will be happy when they can get one for $0 down and pay it in installments (people love monthly payments ;)).

    In fact, I can see those people being happy that they no longer have to give a "down-payment" for a phone. Of course, good credit will become more important!
     
  11. barkomatic macrumors 68040

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    #11
    If anything, I think smartphone sales may increase since you can turn your phone in every year for a new one--while making payments of course.
     
  12. dark_knight177 macrumors regular

    dark_knight177

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    #12
    Once general population realizes that iPhone no longer cost 199$, they will be shocked to see that it now costs $749 for usable amount of storage.

    People will just stop buying expensive flagship phones like iPhone and will start buying mid range devices in $400 range. That's the price range of many excellent android phones. You can't buy any iPhone for that price.

    Inevitably Apple will release a mid range phone for $500 with paltry specs and a 4" screen which of course will fail dramatically.

    This is the start of the decline of iPhone and Apple empire. The only reason Apple survived and prospered was because of subsidized pricing and people didn't know the true price they were paying.
     
  13. I7guy macrumors G5

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    #13
    I'm bookmarking this post, which will be revisited when the next iPhone is released. only time will tell if price can be proved to cause defections to android. A more likely scenario is a hot market for used iPhones.
     
  14. ToroidalZeus macrumors 68020

    ToroidalZeus

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    #14
    Apple is already cutting orders for iPhone 6S. So there is a good chance the iPhone 7 will have peak sales just because of market saturation.

    I think that a lot of people will be initially happy with financing an iPhone however once they finish off their payments and see their monthly bill drop it'll make them more reluctant to hop back on board the financing train. I think this will be more noticeable with family plans because it's easier to justify 30 dollars a month extra vs 120.

    With more people trading in iPhones directly it should shrink the used phone market too.

    Lastly the subsidy has set the 2 yr "salvage' value of the base model iPhone at $200. With all the subsidies gone this could definitely affect the resale price.

    My prediction is it will all depend on screen screen. If the iPhone 7 and 8 aren't much larger than the 6 (i.e. 4.7" -> 5" screen) then the 6 and 6S will hold better resale value down the road.

    If Apple drops the price of the iPhone then resale values will fall. Thing is Apple could reprice the iPhone so it's cheaper than an iPad but then they wouldn't have such inflated earnings each year and their stock price would tumble. So they'll probably fight tooth and nail to keep the iPhones price as high as possible for as long as possible. I don't expect to see a price cut till iPhone 9 or 10.
     
  15. dark_knight177 macrumors regular

    dark_knight177

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    #15
  16. Blaze4G macrumors 6502a

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    #16
    If their was no installment plans and all customers had to pay full price upfront, it would be detrimental. With installments I don't think it would affect it much.

    Believe it or not, I have heard many persons who say they got an iPhone for only $200 brand new, etc. When I try to explain they pay for it in their monthly plan they say I am talking s**t.
     
  17. I7guy macrumors G5

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    #17
    Apples and oranges. The manufacturer is providing $7k in incentives probably due to slow sales. Try to get the the same deal on an accord.

    As far as smart shoppers, they will pick an appropriate plan and device. You don't know what shoppers will do any more than what the Dow will be in sept, 2016.
     
  18. dark_knight177 macrumors regular

    dark_knight177

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    #18
    Actually we do know. We know that consumers are not buying the iPhone 6S that much. So much that Apple had to cut orders by 30%
    --- Post Merged, Jan 17, 2016 ---
    Still, you are getting a BRAND NEW CAR for $37 a month, versus a cellphone for $36. And by the way that cellphone costs $200 to make, versus you are getting so much more hardware with a brand new car!
     
  19. freeskier93 macrumors 6502

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    #19
    Nothing is going to change because full retail prices are still hidden to the consumer. The only difference is the monthly device cost is transparent and not wrapped into the subsidized contract price.

    This isn't at all comparable because these phone installment plans aren't leases, they are essentially interest free loans. The equivalent payment plan for that vehicle (which is about $16k new) would be $668 a month.
     
  20. HEK macrumors 68030

    HEK

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    #20
    It will be impossible to isolate the reasons people will or won't buy the next phone. Opinions and conjecture on threads has no scientific validity as to causality. Since all carriers are dropping subsidies, even carrier to carrier comparisons can't be utilized. Throw in new users, people for whom latest will be a draw, add in the monthly Apple, next, etc users that will upgrade because they can and it will be impossible to break out an individual reasons iPhones sold or not.
     
  21. I7guy macrumors G5

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    #21
    You are making wild assumptions and presenting them as fact based on some opinions.

    - do you know apples' fiscal 4th quarter sales?
    - are you part of apples' supply chain management to know how many units they ordered intitally on a month over month basis and why they are cutting back? (given you don't know the sales, you wouldn't know why apple has cut orders). Also are you aware that sales tend to fall off after the initial surge and is it possible, apple way over-ordered to make sure the supply was there?
    - are you aware (as the poster above said), car sales are fundamentally different than mobile device sales. In the case of the car cited above, the shareholders of the company are pitching in to defray the cost to the consumer. So the cars are costing GM a pretty penny to move off the lot, if you held gm stock it's nothing to be glib about; if you wanted a Cruze. In the case of mobile device sales, your contract or interest free loan pays for the device. Two different sales models two different basis of costs.
     
  22. HEK, Jan 17, 2016
    Last edited: Jan 17, 2016

    HEK macrumors 68030

    HEK

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    #22
    What we know is that like every year in this quarter Apple reappraised it original production estimates putting them in line with actual demand. Companies make a best guess at demand when a new product is produced. These guesses are evaluated based on actual demand and other estimates to level set production.

    If Apple guesses wrong and under builds then they loose out in sales and investors clamor. If Apple guesses high, then they adjust in following quarters, and again investors clamor. These fluctuations are normal. The correct way to look at this is consumers are not buying the iPhone 6s at the volume Apple originally guessed at. Are sales tanking, no. Is Apple in trouble, no. Will any product at any company continuously grow in volume of sales quarter to quarter, of course not.

    You can feel safe dark knight, that Apple is doing fine. What they don't sell in 6s production will translate into iPhone 7 sales. So it's all right, take it easy.
     
  23. zhenya macrumors 603

    zhenya

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    Jan 6, 2005
    #23
    I don't expect there to be any negative effect. Phones that were once at least $200 even with the subsidy can now be bought with no money down and rolled into the monthly price of the phone bill. Eventually people will just forget they are there and just upgrade whenever the new model comes out.
     
  24. Pez555 macrumors 68000

    Pez555

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    #24
    im more interested as to what Tim is going to show on the pricing slide during the event.
     
  25. ToroidalZeus, Jan 17, 2016
    Last edited: Jan 17, 2016

    ToroidalZeus macrumors 68020

    ToroidalZeus

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    #25
    I'd like to mention that I don't believe "0%" financing is going to stay. AT&T has already added a $15 upgrade fee for NEXT so the effective interest rate is 1%. When AT&T cancelled the 2 yr contracts they had increased the upgrade fee to $45. I could easily see them doing the same for NEXT. Or alternatively simply scarping the 0% interest and charging regular rates. At first it would be low like 1-3% and eventually higher. Frog into hot water principle.

    I think in the next 2-4 yrs the combination of market saturation + lack of subsidy will affect the sales and resale value.
     

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