Following the lead of other carriers, Verizon Wireless is killing subsidized phones and will streamline its data plans. New subscribers will no longer have the option to get a new iPhone subsidized when signing up for a two-year contract.
With the iPhone 6s launch likely two months away, this might sound like bad news for Apple, a company that has gotten fat off carrier-subsidized iPhones over the last eight years. But the death of subsidized iPhones could be a really good thing for Apple.
Starting August 13, to get a new iPhone on Verizon you’ll have to pay the full retail price for an unlocked and off-contract iPhone or make monthly payments on your new device. The biggest benefit from Verizon’s elimination of subsidized iPhones is that Apple customers can now upgrade anytime they want.
Back in April, Tim Cook revealed only 20 percent of iPhone users had upgraded to the iPhone 6. A ton of people are waiting to buy their next Apple smartphone, but most iPhone users are held back from upgrading by their wireless contracts.
Now that customers will be paying full price for their smartphones every time they upgrade, it might seem harder to convince people that the $700 iPhone sitting next to a $300 Android is the best option. But cheap Android phones have been trying to eat away at Apple’s sales for years now and the iPhone is still winning.
People are willing to pay more for the iPhone for the same reason the Mac outsells cheap PCs: It’s a premium product.
Smartphones are now the most important Internet-connected device to most people. According to new poll data shared by Benedict Evans, one-third of Internet users say they need their smartphone more than a laptop. People are finally at a point where the smartphone has become an important tool — it’s far more than just a fun plaything gadget.
Because it’s so much more important in their daily lives, people are willing to shell out extra for the best smartphone.
If you don’t want to pay the full Apple tax, though, Cupertino has created a trade-in program that will pay you for your old smartphone. Buying an iPhone off-contract can be a lot more affordable if you toss in your old phone.
For those that don’t want to pay $700 every two years to upgrade at full price, there’s always the assurance that the iPhone will retain its value better over the long run than any other smartphone on the market.
Every year I haven’t had an upgrade available for a new iPhone model, I’ve been able to sell my old iPhone on Craigslist to cover more than half the cost of a new iPhone. And if you don’t want to pay $700 once every three or four years — or ever — T-Mobile, Verizon, AT&T and Sprint all let you rent one for a little more than $20.
The way things are shaping up, there’s almost no excuse not to upgrade to the iPhone 6s now if you really want to — and that’s a great thing for Apple.
Buster Hein is a freelance writer who lives in Phoenix, Arizona. Twitter: @bst3r.
139 responses to “Why Verizon killing subsidized phones is good for Apple”
I disagree. With android phones becoming increasingly better that 1/3 the price (like Moto G), it’d be harder for Apple to convince users to cough up more $ per month ($10 vs $30 for Moto G vs iPhone 6 Plus).
Just my opinion.
Except the iPhone 6/6+ destroys the Moto G in actual performance. They’re not comparable.
That’s a fair enough argument. Although, does everyone need 100% best, fastest phone? Maybe not.
I do think though that FaceTime, iMessage and iCloud services are very good in functionality. (Especially the part where if iMessage fails, it drops back to cellular text messages unlike hangouts).
Got a hard time believing that the iPhone is 362% better than the Moto G. Especially since you can drop your Moto G underwater without a problem. Can’t say that about the iPhone.
You’d be surprised how water resistant the iPhone 6 is. My fiance has dropped hers in the tub 3 times already and it hasn’t caused any issues at all.
If you grab any electronic that isn’t plugged into the wall immediately, you can reduce the damage it can take. Short of liquipel (which is amazing stuff), an iPhone (or any device that isn’t water resistant) will fail very quickly if actually submerged for more than a second or two.
Not necessarily, but it does help with the longevity and overall smoothness of operation. Like with my Mac: I bought the top of the line processor when mine came out and it has outlasted everyone I know that got one of the lower models. And it still runs really well!
Also, I applaud you for actually making a good response instead of the usual drivel you see below my comments. Discussion is good when people understand how it works and you clearly do.
So what its 4 times more and a foolish waste of $$
Not a waste. Try using facts, dum dum.
Really? It loads and opens applications 362% faster? Because that’s how much more the iPhone costs.
You don’t understand how this works. Try again.
Nope. Would rather pay $1000 to us iOS than get a free Android phone.
Hell, I’d rather not have a phone at all vs. have to use Android. It’s iOS or nothing for me…
Pathetic thinking..you are in love with a very basic insecure phone os, you have been fooled into thinking its a “quality” experience.
These Fandroids will always disparage Apple, even though their phones wouldn’t exist in the form it is, had Apple not come out with the iPhone in the first place. It’s more than iOS, it’s the entire environment that Apple has built that hands-down beats the hot mess that is Android.
So everyone should use Apple forevermore because 2007 iPhone? Um, no.
Google maps, Google dictation search, and widgets FTW. I’m typing this on my iPad Air but carry a Moto X, so I know from experience.
I’m not saying they should use the iPhone. Everyone is entitled to their choices, however they should at least acknowledge and respect Apple for pushing the envelope and moving the industry forward. RIM did not and they paid dearly for it. Google is great of you don’t mind them data mining
everything about you. Enjoy.
If you want to pay for security vulnerabilities that wont be fixed, then yes, buy android.
I think you fail to understand that even apple takes weeks to fix software glitches. And if you buy something like Moto X or Moto G, they update their software quite frequently (as all updates are done via Google play store and not via old-clunky-carrier based updates) like most iOS users/fans assume.
Exactly. Weeks versus many months or years or likely never (if your device is over 1.5 years old as google has admitted).
That difference in time matters for those with things to lose. If you have nothing to lose use android.
Read. And re-read my comment. You FAIL to understand what argument I’m presenting and proving yourself to be a troll more than a fanboy.
Your argument was that android would win not moto. Nice try though.
They may update their proprietary apps via the Play Store, HTC moved to this route as well. But OS upgrades are still carrier dependent…
Same with Apple look up XARA
If it is an issue it can be pushed out in one day to hundreds of millions of devices. It takes 1 year on android devices.
Its an issue …with IOS and OSX. Apple needs to re-code both from the core of how they handle shared security to eliminate the existing ongoing threat.
Windows. Ha
Also, which xara sub-vulnerability are you particularly worried about. The custom URL stuff doesn’t require anything near a rewrite.
Interesting take on this news. I think the exact opposite, this is bad news for Apple. There is a reason ipad sales are currently nosediving faster than any other tablet vendor and Macs have 40% US smartphone market share is subsidies hiding the $700 cost of new iphones. Eliminate subsidies revealing the true costs and there is no way in hell people would spend $700 every 2 years.
Well, Sprint, T-Mobile, and AT&T have either eliminated, or pulled back on phone subsidies for at least 2 years now, and Apple has had some of its most successful quarters in there history, during this time. Verizon is just now catching on. In fact T-Mobile the first company to do this, has now beat sprint to become the #3 top carrier.
Uh, iphone market share and absolute sales number in US went down both year over year and sequentially according to Kantar. So less iphone sales in US is good for Apple?
They went down during the quarter be for a new iPhone launch. It always goes down during this time. Every other quarter before the last, it went up substantially. And iPhone sales are up substantially, year over year. Also iPhone market share went up this last quarter everywhere except the US.
Yes but usually not down YOY. Remeber, we are comparing Q1 to Q1, Q2 to Q2 etc YOY. If iphone sales keeps going down YOY (like ipad) you know something really bad is happening to iphone company. US is very large market, if iphone sales is going down YOY, there must be some solid reason, not a fluke of bad luck as you might put it
What…. Apple made more money this last quarter then they’ve ever made in a third quarter. It was a record quarter. Year, over Year. And this is usually there worst quarter.
That’s his point. Reduction in subsidies is followed by falling iPhone sales. Same reason why Samsung’s profit is falling. People are realizing just how much these devices cost and are going for lower priced phones that do the job just as well. There is a direct correlation between subsidies and iPhone market share globally. Countries without subsidies have low iPhone adoption where countries with subsidies have high adoption.
Lesson is basically buy Lenovo (who owns Motorola) stock.
Reduction in subsidies have existed for at least 3 years now, and yet Apple had there best quarter in there history late last year. Hell, they made more money in one quarter than (any company every made in a quarter in history). Verizon is simply the last company to join in. Also, Apples iPhone sales went up substantially in every other country except the U.S. last quarter(which is always there weakest quarter). Subsidy, or no subsidy. Samsung’s problems are on a whole other level.
BUT…. This whole argument doesn’t necessarily hold weight when the iPhone is concerned. Just look at what BOTH Sprint, and T-Mobile are doing as we speak. They say, pay $20 a month on an iPhone, and every year a new iPhone is released you can just upgrade for free (Sprint $20, T-Mobile $15). This is insane, and it beats a subsidize plan any day. Also expect AT&T, and VERIZON to follow suit, or offer there own specials when the iPhone 6s is released.
This is, and usually has always been the case when the iPhone is involved. There will always be something. No subsidies, then use this plan.
You are ignoring the geographical data. iPhone shares were falling in virtually every region that did not have subsidies in the past three years. The sole reason that iPhone sales are up as a whole is because China Mobile got a deal for the iPhone and is offering 3 year contracts with subsidies. iPhone market share is single digits in places like Spain where there aren’t subsidies. Without subsidies, Apple has a big problem. And US iPhone sales are declining and started to decline once TMobile went to no subsidies. Ultimately, this no subsidy thing in America is going to hurt every major company short of Lenovo. Apple’s saving grace is China. But even China Mobile cannot sustain years and years of subsidies the way Softbank can give away iPhone 5s on the day of release for zero Yen. There is a direct correlation between subsidies and adoption of flagship phones across the planet. And it makes perfect sense that Apple’s iPhone North American sales are declining as subsidies go away. Once AT&T kills it off, we should see flagship iPhone sales tank, and older models boost as Apple relies on older models to fill the midrange gap.
The JUMP program only works if you need to upgrade every 6 months. And you’re still better off just buying something like a Moto G or a Nexus 5 and banking the savings. Constantly paying for new phones over 3 years is far more expensive than just keeping a mid to low priced phone for 3 years. I’m a $131 richer than those who are constantly on JUMP, actually more as those phone fees are more like $27. I’m almost $300 richer then they are.
Wait. The iPhone sales literally went up this last quarter, in every country except the U.S. And, they have gone up in sales in the U.S. during every quarter this year except this one. And the T-Moble plan is a, brand new plan, that gives no need for subsidies. It’s not based on 6 months, and right now, its only for the iPhone. $15 a month, and upgrade to a new iPhone, when the newest one comes out. Sprint has a similar plan, only for the iPhone.
With plans like that in place, why exactly would these subsidies be so important. Hell, my bad just brought an iPhone 6, and At&t, never once told him about the so called true cost of the phone, and they never will. They just gave him deals like this one, and told him, and other customers around us that they didn’t have to deal with the contract any more, just pay off the phone at a certain price per month, and they were ecstatic.
Uh, iPhone sales went up. But not in every country. You are misreading the data. Most of the new sales were in China which is expected.
T-Mobile has been subsidy free for at least 18 months. That is not “brand new.”
If the people who are selling the payment plans are not telling buyers the actual total price, they are almost certainly violating consumer protection and disclosure laws. When my sister went to get a S4, she was told the total price and her payments. If your local sellers are not disclosing the total price, then they almost certainty can be sued.
FYI, you’re still ignoring how in no subsidy countries, iPhones do poorly.
An example is Europe. They have been getting rid of subsidies for a long time now (at least 5 years). Every major carrier as well as 30 more have dropped phone subsidies, and yet the iPhone sales went up last quarter. The reason is those subsidies have been replaced with payment plans, no different then in the U.S. within the last few years. And yet Apple had there best U.S. sales numbers in history late last year, while T-Mobile, AT&T, and Sprint had no subsidies.
Now, last year Sprint was the first to introduce this “brand new” type of payment plan that’s exclusively for the iPhone. You pay $20 a month (no other cost for phone payment), and you can upgrade to the next iPhone free of charge, every time a new one is released. Now, just late this year T-Mobile is following suit with a “brand new” plan of there own ($15 a month). This is not the typical JUMP plan, where you pay a small fee (like $5 or $10) on top of the phone payment plan. Its a “brand new” plan, and iPhone exclusive.
marketshare doesn’t matter, apple makes 92+% of all profit. moto and such are just giving away phones for free with no long term plan.
The plan is to outlast Apple and that won’t be too long with people not wanting to fork out $650-1000 without a 2yr subsidy illusion. Apple is dying.
Um, android OEM has zero profits and no money in the bank. Even if apple went for zero profit like android they would outlast them as investors would give up on android.
The issue is knowing the phone really costs $700 in the 1st place not $200, which most people have no clue about.
Ok fine, you still decide to get the latest iphone. You pay it off in 2 years & you see your bill drop $25 while your current iphone is still in good shape and working fine. Will you decide to ignore the bill savings by upgrading every 2 years as Apple relies on spending $700 every time as quickly as with the subsidy system where price is hidden?
Price transparency is what will make some people (not all) think twice about making the every 2 year investment.
Hmm…OK. I don’t think most people really care, when it comes to this phone. BUT, even if they did, when it comes to the iPhone there will always be something available.
Just look at what BOTH Sprint, and T-Mobile are doing. They say, pay $20 a month on an iPhone, and every year a new iPhone is released you can just upgrade for free (Sprint $20, T-Mobile $15). This is insane, and it beats a subsidize plan any day. Also expect AT&T, and VERIZON to follow suit, or offer there own specials when the iPhone 6s is released.
If you don’t like that, you can always turn in a last gen iPhone to sites like gazelle, and get more than half the price of a new iPhone back in cash. This has been done with the iPhone for years.
When it comes to the iPhone the options are kinda the roof.
Bear in mind, those payments are for a lease. You don’t own the phone. So insurance is darn-near mandatory. And it’s $13/month. So now that $20/month is now a much less palatable $33/month.
No, iPad sales are “tanking” because tablets aren’t something that you have to replace every couple years. Heck, there are many people that still use an iPad 2 because it still works great for them! And yet, the iPad is still the highest selling tablet.
And no, the author is absolutely correct. People are willing to pay the premium for the iPhone because it is a premium product.
Just because people are willing to pay a lot for iPhones just means everyone that would rather spend less is now screwed. You’re all insane for trying to act like its awesome that we get to pay full price now
Nah, but we’ll pretend for you so it’ll feel more like your dream world.
“There is a reason [Mac] sales are currently [accelerating] faster than any other [PC] vendor…”
Is it because PCs are priced at 60% off and “just as good” as Macs?
No. It’s because we’re at that point where unless you are deadset on running the latest games or heavy graphic software at the very highest modes, a computer that was built several (I would even say 3+) years ago with decent components can and would run most games/software out there at reduced visual qualities. In addition, you can buy the parts and assembly a PC together almost as easy as paint-by-numbers for better prices than buying it off the shelf, and these are not being counted as PC sales. I bet if you took a survey of all new PC going online/live vs # of Macs, the # of Macs would pale in comparison.
Back to the topic, I do think with subsidies going the way of the dinosaurs will hurt Apple, since not a lot of people have the stomach to drop $500-$1,000 on a phone. And yes, one of the commentator’s post about how after seeing a $25 drop in your phone plan once you’ve paid off your phone will have a big impact on your next phone upgrade is true.
This is a non issue. Just pay monthly for the phone like you already do. With the cheaper smartphone access it comes out about the same. Not sure how people can not see this.
The reason is because they last for 5 years.
Agreed. Do you think the parents of these kiddos looking for their first phones are going to shell out $750 for a new iPhone either up front or through payment plan versus a $400 Android? I don’t think so.
If I have to pay full price for my phones and pay almost the same price every month as I do now on a subsidized plan (I already priced out Verizon’s new non-subsidized plans) I won’t be buying any phone with the thought of upgrading. My phone will become like my car, I’ll upgrade when it quits working.
Excellent point. I sell wireless and one of my closing phrases was “you may as well upgrade; you’re paying for it anyway.”
Now, when I decide to upgrade, I’ll either have to shell out $600 or have my bill go up $20+/month. I’ll definitely wait as long as I can before getting a new phone of any kind.
There are NO PHONE SUBSIDIES. Phones are sold with a high interest loan payable over two years as part of a contract.
Call it what you want…if it is cheaper in the long run I don’t care, and with the amount of mobile data my wife and I use every month it is.
So with the $1000 I’m losing in subsidies on my 2 phone Verizon plan, will my monthly service costs be $1000 less over the two years? Because I don’t see how paying list price for something I wasn’t paying before is a good thing for me.
You were paying for it before. You just didn’t notice because it was built into the outrageous contract prices.
Yes, I am aware that I was not getting a $1000 dollar gift every two years, that the cost of the subsidies are built into the contract. What I am saying is now that I will be paying full price for a phone, will my contract costs drop by $1000? I seriously doubt it.
Currently I buy a new phone for $300 and sell it at the end of my two year contract for between $300 and $400. I don’t trade it in, I get the best return for it.
Based on the new pricing tiers, you can save around $800 over a 2-year contract on a single line. So yes, you will be getting that money back if you switch over.
“What I am saying is now that I will be paying full price for a phone, will my contract costs drop by $1000? I seriously doubt it.”
You seem to have for gotten the $350 x 2 you’ll get for the phones you’ll sell each year. So, yes. It all turns out in the end. Sharpen that pencil.
Ha! Someone gets it! The amount of time / value folks spend on their smartphone makes it worth paying the Apple premium. Break down the incremental cost per day or hour and it is pennies. With Samsungs premium phone demise, Apple owns premium segment, and w growing world middle class, the market swing (premium and low end) to iPhone will only continue. Thanks for the article.
Um, in what way is iPhone “premium” exactly?
In all the ways. Premium construction, premium materials, premium OS, premium performance (actual performance is better than every other smartphone).
Cool. You go right on believing that then. Don’t be worrying about the facts now.
The facts prove me right, dumbass. You should look at them for a change.
Crikey. It took you nearly a week and that’s the best you could come up with?
I would say you are deluding yourself, but clearly you are happy to be deluded by the marketing. That’s cool. So long as you are a happy camper then good for you mate.
Yes Iphone is four time better than all other devices with its 8mp camera just look at MSRP
lol phones
Try looking at the facts again, ignorant hater.
I’m sure that you know this because of the many premium Apple advertisements.
Yeah, none of that is fact. You should try using them next time when you’re trying to make a point.
With the subsidized pricing going away I am more hesitant on what phone I purchase. Of course I want a new iPhone, I’ve had an iPhone since the 3GS and upgraded ever S addition. I don’t care who you are $700 is a lot to hand over for a phone. It seems that even at the “monthly rate” you are saving more than shelling out the upfront charges, however carriers are jacking people with these “connection fee’s.” This is the first upgrade period where I have had lots of considerations to make. I may just stick with my 5S for the time being or try to find a deal on a 6 from someone trying to sell theirs off to upgrade. I am a fan of the “S” additions though. I really don’t care about being locked into a contract personally, if you have a good carrier and deal than theres not much of a big deal to me. I have a great deal with AT&T and coverage, an upgrade would screw me over though due to these changes. If I purchased a phone off contract than I could just swap sims I guess, but than again were back to shelling out $700 plus to get the phone I want.
Well… when it comes to the iPhone there will always be something. Just look at what BOTH Sprint, and T-Mobile are doing. They say, pay $20 a month on an iPhone, and every year a new iPhone is released you can just upgrade for free (Sprint $20, T-Mobile $15). This is insane, and it beats a subsidize plan any day. Also expect AT&T, and VERIZON to follow suit, or offer there own specials when the iPhone 6s is released.
If you don’t like that, you can always turn in a last gen iPhone to sites like gazelle, and get more than half the price of a new iPhone back in cash. This has been done with the iPhone for years.
When it comes to the iPhone the options are just through the roof.
No, the $20 a month is not an awesome deal. After one year I have spent $240 for the basic 16gb iPhone and have nothing to show for it’ but can replace it with a new phone. Currently I pay $299 for the 64 gb iPhone and after two years I can resell it for nearly $400. So I’ve made money and can upgrade. I don’t need a new iPhone every year, the two year cycle works perfect for me.
Well then don’t change. This is going to better for a lot more people. Just because you don’t like it doesn’t mean it isn’t good.
So, I was going to upgrade my Samsung Galaxy S3 to the iPhone 6 this week. But, since I’d pay the $20/month in the new 2 year contract anyway, doesn’t it make sense to just lease it for $20/month when Verizon comes out with their own lease plan when the iPhone 6S comes out this fall?
T-Mobile’s lease plan is $15/month right now and you can use Jump On Demand to get the 6S when it comes out. Perfect time to switch; you won’t regret it! I jumped from Verizon over a year ago and my service has been better than it ever was.
Hmm… The going rate for a used 2 year old iPhone is usually around $300 on ebay, when a new iPhone is announced. I’ve never seen it go for $400 dollars after a new iPhone release.
You don’t get it.
It might have something to do with the old monthly network payments are dropping as they’re moving from the previous subsidy model to this new one. But never mind.
Completely disagree. The Macbook vs PC comparison is irrelevant as It’s a dying market. When laptops were in high demand, PCs dominated the market, relegating Macbooks to “niche”customers.
Save for the insufficient battery life, I love iPhones. But Apple abused carriers by charging incredibly high prices for their phones yet dictating the prices the carriers could charge the customers. So when a customer saw a $199.99 price on both a Moto X and an iPhone 6, they had no idea the carrier only paid $400 for the X and got jacked $650 for the Apple. Now that subsidies are going away, iPhones are, for the first time, going to be subjected to true market pressures.
And as much as I’m sure I’ll want an iPhone 6S when it comes out, there is simply no fiscally responsible way I can justify a $250 premium over what looks to be an excellent Moto X. I’m sure a lot of buyers will feel the same way.
Except that the iPhone outperforms the Moto X in every way. The premium is for a better phone.
And yes, the Mac/PC comparison is relevant.
Most consumers will not care if it out performs or not they will look at the price first and performance second I know for a fact I will be going back to android when my current contract is up.
Informed consumers consider both. More and more people are becoming informed consumers.
And you underestimate people. Kids will complain if their games don’t play well or aren’t stable. The premium of the iPhone means better overall performance for the things people do actually care about.
Dude, you just stated two opinions without substantiating them in any way.
Let’s say you’re right. A Ferrari outperforms a Honda “in every way” too. They sell a hell of a lot more Hondas, though. Price is a factor.
And from what I’ve seen, the Moto X has a higher resolution, faster processor, more RAM, blah blah blah. You can’t just say an iPhone “outperforms in every way”. It is at least a discussion. Actually make a point when you comment, please.
The market will obviously bear out the truth. Europe has never really subsidized and the iPhone sells very well over there, so I imagine it’ll still sell well here, too. I’m just saying there’s no way they won’t take a hit. When a product that was the same cost as everything else is now suddenly $250 more, it WILL affect market share.
“And from what I’ve seen, the Moto X has a higher resolution, faster processor, more RAM,…” more malware, more ads, less privacy, more display jitters, weaker game performance, slower patch updates,…
I agree on all points. I prefer iOS. My point isn’t the comparison hardware-wise; it’s the effect on the market the price change is going to have.
And that said, ignoring price completely, an argument that the Moto X is better can be made. You know, if you’re not a blind Apple fanboy.
As an impartial astute observer, what’s your view on
“more malware, more ads, less privacy, more display jitters, weaker game performance, slower patch updates,…”?
Did you not read my comment above? I said I agree with you.
Its fanboi the “i” for the “i” in Apple products
Haha!
In my experience, my Moto X definitely and repeatedly has better signal reception side-by-side with iPhones on the same network. Radio quality is central to smartphone use. More malware? Not if you don’t download it. More ads? What are you talking about? Less privacy? I can toggle location and wifi from a home screen widget. Display jitters? No. Updates? They rollout to Motos at the top of the cycle because Motorola (and Nexus) use an unembellished OS. Maps and voice search are much better in Android.
I use an iPad and a Moto X. I prefer android in appearance, configurablility, and features and the device in real-world mobile performance.
Except in this case the Ferrari is outselling the Honda (and everyone else’s flagship).
All the benchmarks prove the iPhone to beat the Moto X. Lower specs on paper mean nothing when you have an OS that’s fully optimized for the hardware. The iPhone beats all the other smartphones with its “lower specs”. Maybe next time you could be bothered to your own research instead of being a lazy ass internet commenter who doesn’t know what the hell he’s talking about.
You are completely and totally missing the point. Maybe reading isn’t your strong suit. Or perhaps you just like insulting people online. The “lazy ass internet commenter” is the one who:
1. Pays no attention to the point of the original post, which was potential effects non-subsidation may have on the market.
2. States contrary opinions like the “Mac/PC comparison is relevant” with no substantiation whatsoever, like just saying it after I stated otherwise makes you right.
3. Doesn’t even realize that I’m mostly agreeing with you on the hardware issue, because the second you thought someone had a negative opinion of your precious, precious baby iPhone that you cuddle with as you sleep with your iPhone pillow and iPhone pajamas then wake up and go to school with your little iPhone lunchbox, you immediately went on the attack.
Perhaps next time you could actually, you know, UNDERSTAND a post first before replying?
“…charging incredibly high prices for their phones yet //dictating// the prices the carriers could charge the customers.”
I think the FTC, Justice, and the EU would have had Apple in court for //dictating//. Maybe all the telecoms needed to charge the same $200 because //free markets// and //competition//. Maybe.
Nope. MAP (minimum advertsied price) and MP (minimum price) agreements are made all the time, and are perfectly legal. Why do you think you never see a “discount Rolex sale”? Price is part of Rolex’s marketing, so if you want permission to be a reseller, you have to sell at a price they say to sell it.
Same with Apple. I know this because–tada!–I sell Apple. If I sell an IPhone 6 16gb for any price below or above 199.99 I’ve put my company is danger of losing its contract to sell Apple.
This is also the reason why, when you walk into many retail outlets, the sales force tries to talk you out of an iPhone. The sale of an iPhone is a net loss to the provider, so the commission is terrible.
Google how much money Sprint makes per iPhone. Okay, I’ll save you the trouble: they don’t. They lose money with every sale. They’re gambling that the iPhone brings in more customers to their overall base, then buys other things like tablets and mobile broadband.
Of course, this all changes now that the consumer will be the one paying for the full retail of the device. People that bitched about two year contracts have no idea how good they had it.
“Nope. MAP (minimum advertsied price) and MP (minimum price) agreements are made all the time, and are perfectly legal.”
So perfectly legal negotiations between two businesses within an open marketplace are described as ”dictating”?
Would you call what Verizon does to its business partners //dictating// or competent negotiations? Can you name any successful company that generously supports its partners? Uber? PayPal? Google? Microsoft? FaceBook? United Health? Visa?
I’m not following your point. Is your problem my choice of the word “dictating”? The comment I just made was that it was perfectly legal. So call it what you want. Call it “negotiating”, “hard-balling”, whatever. It sounds like you’re trying to make the same point I am.
My point was, Apple, in their contract, makes you sell their phone at the price they dictate. We definitely could have sold it for much more in 2011 and 2012.
Now, with customers paying attention to the actual prices for the first time, retailers and providers no longer will be taking a loss and the market will adjust.
“People that bitched about two year contracts have no idea how good they had it.”
I completely agree.
PCs just work mine is four years old so is my Vaio only Apple users replace at yearly or two yrear intervals once their Macs fail
To be fair, I’ve heard many stories of people using their MacBooks for eight or ten years.
Usage is relative old Macs become useless and network protocols like discovery d and inherent XARA flaws make Apple computing a dubious endeavor
Verizon has the priciest contracts in the industry. If they aren’t
going to subsidize the phones, they had better get the service cost in line
with competitors.
In the subsidized world, the customer feels obligated to upgrade very
two years. If they’re paying for the phone via the service contract,
they might as well pick out a new one in the store, since they are paying for it anyway.
Although removing the subsidy eliminates the customer’s mandatory waiting period, it also introduces the possibility of customers waiting even LONGER to upgrade, since there is no built-in sense of urgency to go get a new phone.
When cars cost $5000, it was fairly common to upgrade every 2-3 years. Now that they’re closer to $30,000, people keep them much longer. For that price, the customer expects a 10-year lifespan.
A $200 phone is OK with a 2-year lifespan. A $700 phone is not.
Good thing iPhones last longer and hold their value better than all other smartphones.
iphones have most cracked screens ..look around its a disaster
If you’re careless enough to drop them.
Nope. You’re trying too hard. Careful or you’ll get an aneurysm. It’d suck to get one over trying to prove how ignorant you are.
Someone gets it.
Not you.
“Although removing the subsidy eliminates the customer’s mandatory waiting period, it also introduces the possibility of customers waiting even LONGER to upgrade, since there is no built-in sense of urgency to go get a new phone.”
I agree. Don’t be surprised if upgrade cycles for iPhones become 3 to 4 years
$700 is also just the base. My current 64 gig 6 Plus would have cost me $850 up front or portioned out over 24 months. That’s a hard pill to swallow when you’re shelling it out up front.
I believe the other thing that this new model will result in is the full profit from the phone goes on Apple’s books immediately vs over the length of the contract. HUGE one time increase in income per unit sale.
Don’t see why no one is looking at the big picture. this NEW model is for one purpose to steal ur profit from OWNING your phone. Its the same as leasing a car pay higher insurance keep paying monthly never own! Can’t hand it down just keep paying company. How can that be beneficial to ALL consumers? i don’t lease cars and i shouldn’t HAVE to lease my phone!
Whether or not a carrier is subsidizing the cost of a devise via a contract plan has no impact on Apple’s income statement. When a customer buys a new iPhone from AT&T or VZ, Apple gets paid by the carrier via wholesale and Apple has always demanded payment up front from the carriers with the carriers taking on the risk associated with a customer who may default on a contract or pay over time arrangement. This will impact VZ’s income statement.
PS – CoM: What’s w/ the Dr. Jeckel/Mr. Hyde attitude on carriers using contract subsidies? AT&T got rid of the subsidy via contact option earlier this year and you wrote them off as the devil incarnate. VZ does this and you embrace the move as though it came from the Temple Mount.
Perception wil extol a heavy cost each customer will have to decide if they want to spend north of $650 on an Apple phone family of four over $2500 for devices ad wrist accessory another $1200 pretty much wasted $$
Apple has successfully made most of America think the iPhone is $199 and on the back end through complicated contracts extracted FULL MSRP from everyone who in the past go a contract iPhone…Why? America got snookered.
Then this buyout of ETF to jump ship hid that fact even more.
NOW contracts will be dead, you pay for the plan and buy the phone
So every consumer will now understand what they are paying for that phone.
If you want iPhone you will pay up front or through payments full MSRP ($650-1000)
Or you select a $40-$400 other device..simple
I was watching someone at a party using iPhone..how basic. Seriously what do you see in that basic grid nonlive interface? That is the best? I think not.
I’m sure you were the funniest guy at that party where you saw that iPhone
yep
Don’t feed the troll.
I completely disagree, this is not at all good for Apple. There is a big difference with a consumer looking at a cheap Android phone which is free and then choosing to pay $200 for an iPhone, currently and a consumer pay $300 for a really nice Android phone vs $650 for a really nice iPhone and then seeing their monthly plan as being the same. The subsidized plans are confusing and many consumers think you pay the same regardless.
I think now if I get the $50 plan a month and that will be consistent between an iPhone and any other phone I think you will see a lot of people buy a nice $200-$300 phone over a $650 iPhone. I think this is a big deal for Apple and if they are smart will do something like introduce a $400 iPhone 6c or something similar.
If anyone thinks consumers being exposed to the full-price of iPhones will not hurt Apple by slowing down the rate of upgrades/purchases then they’re out of their mind. I suppose I’m out of my mind for reading this click-bait article in the first place.
This article is stupid. Who really drops $700 on a 6s one year after getting a 6? People who write stories about iPhones for a living. I have 900 other things I want to drop $700 on. My phone will no longer be subsidized, I will see zero difference in my bill and in two years a new phone won’t cost me $199, $299, etc. it will be $700 plus. But I can upgrade any time! Awesome. Sounds great. Instead of like clockwork the wife and I ordering phones every two years the day they go on sale, there will be a big debate about whether or not we really need new ones. Sorry for the sour tone, but the general vibe of this article really annoyed me and really made me like the author is really out of touch with reality.
When I do the math on this, there is no change whatsoever in Verzion’s pricing. They just changed what it’s called, but the numbers are the same. Please check my math here.
My current plan, expiring in three weeks:
30 a month family plan for talk, text, 1 gig of data (cheapest plan they have)
40 a month for each line (I have three, so 120 a month)
Phone was subsidized when I agreed to this plan two years ago, so 1 dollar, plus the 40 per phone activation fee)
Total per month: 150, with 120 in initial activation fees.
New plan according to this article and several others I have read:
30 a month for the same talk, text, 1 gig of data
20 a month for each line, so 60 bucks
20 a month payment plan for each phone (this is for Galaxy S5s), so another 60 bucks (plus initial activation fees of 20 per line)
Total per month, 150, with the initial activation fee now 60 instead of 120.
So a savings of sixty bucks up front, but otherwise exactly the same monthly charge as before. Zero dollars a month savings, and it’s still a two-year contract, because you agree to pay for the phone in 24 monthly charges of 20 bucks per phone, and you cannot just break that and leave, or upgrade to a different phone in one year. I just called Verizon, and they confirmed that you must completely pay off your phone before upgrading to a new, so its still a 2 year contract. Although they would not call it a contract. They said its now called an “agreement.”
So what exactly has T-Mobile pushed Verizon into? I guess the activation fee is cut in half, which is not nothing, but it’s ultimately a savings of less than one dollar a month over 24 months.
Am I missing something here?
I think the only thing you’re missing is that most people use a lot more data. That definitely changes the experience for others.
Yes, I do get that my data usage is incredibly low. So I guess at that low level, there is no such thing as a difference between the services?
You are missing the fact that when you finish paying your phones, your bill will go down substantially. That wasn’t the case before.
You are also missing the fact that one company’s offering has forced yours to ditch “contracts” (so you are not forced to pay for a phone if you bring your own) and to match their lower priced plans (albeit at a lower data cap)
No, I get all of that. My question was limited to my situation, which I think is more common for most people. And it seems as if people who want a new phone will be paying exactly the same price as ever before, and that there is essentially no difference in pricing among any of the service providers.
I’m also unsure how the idea that my bill will go down by 20 dollars a month per phone in two years is such a benefit. Do a lot of people want to use two year old phones? I’m using a two year old s3 right now, and I cannot wait to get rid of it. It’s falling apart, quite literally. And most phones suffer significant degradation over two years. Mo one is building things under the concept of planned obsolescence more than phone providers.
More to the point, however, is the idea that contracts have been eliminated is totally bogus. If you are locked into paying for a phone for two years, that’s a contract. Sure, in the final six months your termination charge is less than it is now, but otherwise…
Verizon is always a day late and a dollar short. To bad they have lost so many customers over the years with communist ruling tactics…
Seems to me like they’re just changing the language
Actually you make a lot of assumptions in this article. I didn’t upgrade to the 6 because it’s too big. It isn’t for waiting for the 6S. If they have another iPhone with the 5S form factor, I will upgrade then. You should look into this before making blanket statements.
Don’t hold your breath waiting on a new 4″ iPhone.
Great for apple. Horrible for customers. Just say it like it is. People use to be able to buy the phone at a cheaper price. That’s no longer an option. Customers lose. Stop trying to act like this is in any way a good thing for me
Buster has it all wrong here.
People were accustomed to upgrading every two years at contract time. After all, their monthly carrier charge didn’t reduce so the upgrade seemed free with a two year contract renewal. Now the carriers are reminding people that nothing is free. Many customers are going to keep their current cell phone and go with the lowest cost plan like Walmart’s Straight Talk or Consumer Cellular. Now instead current iPhone customers buying a new phone every two years it could extend to 4 or 5 years or more.
What I want to see is Apple continuing to make this new unlocked iPhone that works on ALL LTE networks in the US available on launch day. Stop delaying the unlocked ones until later on; it’s stupid.
I didn’t read anything in this article that made me think Apple will sell more phones in an unsubsidized world. Now that the price isn’t hidden in inflated plan prices I think people will either just keep their phones longer or go for cheaper alternatives. Either way, Apple will lose sales.
Congrats, author, you just described the Itards as a group. Nether Apple computers nor iPhones are ‘premium’ products. They are merely glitzy consumer electronics trinkets sold to the
clueless masses that don’t know any better.
There is a Russian ‘new rich’ joke that fits real well with the ITARD crowd:
Joe Itard: I just got this iPhone for $1,000 at that corner Apple store.
Jill Itard: You got ripped off, man. You could have paid $2,000 for it across the street.
The tech is questionable, reliability has gone down considerably over the years.
Those iTards that prefer smartphones over a laptop or desktop obviously haven’t worked a day in their lives. There is no way you can replace a properly resourced workstation with
a smartphone if real work needs to be done.
But then the ITards don’t know what work means, right?