Apple’s New iPhone Leasing Program Signals End of 2 Year Contracts

Apple’s New iPhone Leasing Program Signals End of 2 Year Contracts

Apple announced a new program this week that lets you lease, instead of buy, your next iPhone so you always carry the new iPhone, in a very auto-industry-esque move. What will it take to get you into this new…iPhone?

Front page news:

Happy end of summer SOTechies! After a short holiday, I’m back in action for the fall; woken from my glorious summer slumber by the frenzy of the annual Apple September event. I was already back on camera talking about the best selling features of the newest Apple products including the (creepy) ability of Apple TV to rewind 15 seconds with a voice command and the 3D touch features of the iPhone 6s with a new rose gold finish;  I even spoke candidly about whether Apple was selling out on the vision of Steve Jobs with the laugh-inducing but already well-reviewed Apple Pencil.

Digging in more:

One of the pieces of Apple’s release that has fans talking most is the new Apple iPhone Upgrade Program, which is basically a leasing plan that forever eliminates the pile-up of old iPhones in your desk drawer and a huge cash outlay every September.  With its monthly payment plan, which ranges from $32-45 / per month, depending on the model, you can lease a phone from the Cupertino company (and not your carrier) until the next model gets released.

It’s a new twist on the way we get phones, similar to what we do for cars.  Apple is competing with T-Mobile and Sprint head-on to alter the industry via leasing programs for phones. It also could mean the end of 2 year contract renewals with AT&T and Verizon to get the newest iPhone because you can go directly through Apple to get an unlocked phone and bypass carriers altogether and their $199 upgrade schemes.

new iphone upgrade program

Apple’s Upgrade program via ABCNews.com by way of Apple

Reading between the headlines:

Psychologically this is a drastic shift for customers who are used to enjoying ownership of their phones yet find themselves in a recurring dilemma when the new iPhone comes out on whether to upgrade to the new iPhone or not.  Options were always less than ideal: resell or trade-in for way less than the original purchase price or simple let your old phone sit idle.

For the biggest Apple fans the idea may resonate well because the Upgrade program allows them to get the newest iPhone along with AppleCare+ at a cost of around $770 instead of $650 directly through a carrier. That prices includes the AppleCare+ warranty (which usually costs $99 a year and covers up to 2 years of hardware repairs and two incidents of accidental damage).

Even with premium pricing, Apple’s bet is for customers to begin to choose freedom from contracts, stripping mobile carriers of an already eroded power dynamic and creating a direct channel to the consumer.  In my opinion, this is just a preview of the shake-up Apple is a year or two from instigating in the media (read: cable TV) industry.  Direct-to-consumers means a win for consumers.