Apple did get one thing sort of right, subscription phones.
Yesterday I vented about how bad the iPad Pro was and how mediocre Apple TV was. What I glossed over, in favor of some time to reflect and review was an announcement that Apple would now effectively sell phones on a subscription basis. Not 100% true, but close enough. Basically, you can sign up for a 2 year payment plan, but after a year you can upgrade (and presumably replace your current 2 year plan with another). The payment also includes AppleCare+, which given the cost of these devices and their inherent fragility is probably a darn good thing too.
I had basically argued in the past that, should carriers abandon phone subsidies, Apple would be hit the hardest. This move mitigates that damage. And, in a country like the US where plans not including phone subsidies or phone payments are quite competitive on pricing this could be astoundingly lucrative for Apple. Would love to see Microsoft follow suit on this one as they do make phones and also have physical stores they sell them from. They seem equally equipped for this.
Apple however gets extra benefits from this which Microsoft wouldn't enjoy. Not only does it help with a lack of phone subsidies and help consumers break free of contracts altogether. But, if a user upgrades the phone after a year they get used and not super outdated models directly that they can refurbish and sell back to customers at discounted prices. Apple's weakness outside of the iPad was always their refusal to be more flexible in price points they hit. This could enable them to do just that. People aren't really clamoring for cheaper Windows Phones so MS would just be getting back scrap. But, that doesn't negate the positives.
And that's not all. When you consider the rate for these payment plans, after a year, you'd have paid less than the device cost, but I'll wager it is also enough to cover the actual cost to Apple. So, while you feel you're getting rid of you old phone before you've even fully paid for it Apple still makes some profit and you've committed to doing it all over again. Win-win. As long as you want to keep upgrading yearly at least.
That's STILL not all!!!! Carrier upgrade plans just try to keep you locked to a carrier. This model keeps you locked to Apple specifically. Once signed up, your options are wait out a full two years before you can switch phones or just suck it up and get the latest model some point after the 1 year mark. Even those who eventually become dissatisfied with their iPhone will probably buckle and hope that upgrading to another Apple product will resolve their issues.
I mean, most people I know are stuck in contracts. And every last one of them would love to be free of them. But as near to none of them as matters are able to justify waiting out even two years to be free. They simply cave, and then upgrade as soon as possible.
I know that carriers changing their billing models around phone subsidies is the motivator, but I am kind of surprised at how long it took Apple to do this.
If Apple applies this strategy to their entire product line, it could serve to help them finally beat Windows in the (now waning) PC market. Again though, I'd love to Microsoft offer this for their Surface lineup as well. Some PC manufacturers do this, but they tend to use 48 month terms which is too long and they often have shit infrastructure for payments (hard to pay off early, track where you are in your term, etc...).
I had basically argued in the past that, should carriers abandon phone subsidies, Apple would be hit the hardest. This move mitigates that damage. And, in a country like the US where plans not including phone subsidies or phone payments are quite competitive on pricing this could be astoundingly lucrative for Apple. Would love to see Microsoft follow suit on this one as they do make phones and also have physical stores they sell them from. They seem equally equipped for this.
Apple however gets extra benefits from this which Microsoft wouldn't enjoy. Not only does it help with a lack of phone subsidies and help consumers break free of contracts altogether. But, if a user upgrades the phone after a year they get used and not super outdated models directly that they can refurbish and sell back to customers at discounted prices. Apple's weakness outside of the iPad was always their refusal to be more flexible in price points they hit. This could enable them to do just that. People aren't really clamoring for cheaper Windows Phones so MS would just be getting back scrap. But, that doesn't negate the positives.
And that's not all. When you consider the rate for these payment plans, after a year, you'd have paid less than the device cost, but I'll wager it is also enough to cover the actual cost to Apple. So, while you feel you're getting rid of you old phone before you've even fully paid for it Apple still makes some profit and you've committed to doing it all over again. Win-win. As long as you want to keep upgrading yearly at least.
That's STILL not all!!!! Carrier upgrade plans just try to keep you locked to a carrier. This model keeps you locked to Apple specifically. Once signed up, your options are wait out a full two years before you can switch phones or just suck it up and get the latest model some point after the 1 year mark. Even those who eventually become dissatisfied with their iPhone will probably buckle and hope that upgrading to another Apple product will resolve their issues.
I mean, most people I know are stuck in contracts. And every last one of them would love to be free of them. But as near to none of them as matters are able to justify waiting out even two years to be free. They simply cave, and then upgrade as soon as possible.
I know that carriers changing their billing models around phone subsidies is the motivator, but I am kind of surprised at how long it took Apple to do this.
If Apple applies this strategy to their entire product line, it could serve to help them finally beat Windows in the (now waning) PC market. Again though, I'd love to Microsoft offer this for their Surface lineup as well. Some PC manufacturers do this, but they tend to use 48 month terms which is too long and they often have shit infrastructure for payments (hard to pay off early, track where you are in your term, etc...).
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