Why Verizon killing subsidized phones is good for Apple

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The iPhone 6s and iPhone 6s plus are coming on September 18th, according to German carriers.
The iPhone 6s and iPhone 6s plus are coming on September 18th, according to German carriers.
Photo: Killian Bell/Cult of Mac

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.