Why Apple's iPhone Upgrade Program Is a Bad Deal For Most

Mark Wilson writes: You may have heard that Apple had a little get together today. There were lots of big launches — the iPhone 6S, the iPhone 6S Plus, and the iPad Pro. Those waiting for an iPhone fix were given quite a lot of get excited about, but like your friendly local drug dealer, Apple has a 'sweetener' to help ensure its customers just keep on coming back for more: the iPhone Upgrade Program which lets you upgrade to a new iPhone every year as long as you keep paying each month. On the face of it, it might seem like a good deal — particularly as the price includes Apple Care — but is that really the case? What Apple's actually doing is feeding the habit of iPhone junkies, keeping their addiction going a little bit longer, and a little bit longer, and a little bit longer. In reality, Apple would like you to perma-rent your iPhone and keep paying through the nose for it. Ideally forever.

Comments

Get used to it, this is the future

[Aboroth]

Monthly payments for everything you use and pretend to own! From your music you listen to, to the movies you watch, to the software you use, to the storage space on the cloud where you keep all your data, and the physical hardware you pretend like you own. Pay for everything in your life, for the rest of your life! What a deal! Fall on hard times for a few months and miss a few payments, and watch your whole life disappear! Weeee!

Re:Get used to it, this is the future

[phantomfive]

What we really need is a payment program that will pay for payments.

Re:Get used to it, this is the future

[LaurenCates]

I can't imagine why this has suddenly become a thing. Outside of Netflix, which I understand, since movies are a way different beast than software and music.

If there's one damn thing right my parents taught me, it's about owning my own shit. Get things paid off as quickly as possible so that it's yours, and you don't end up dependent on anyone or anything for the thing you've paid for, especially if it's something you need on a moment's notice.

I've had to explain to more than one person that "the cloud" is a cute as hell idea, until "the cloud" is down for a few hours, or gets hacked.

Re:Get used to it, this is the future

[thedonger]

I can't imagine why this has suddenly become a thing.

It isn't sudden. Gyms have been on this train for years. New car salesman want you to "buy" a new car every three years. Make the monthly payment part of life, and people forget it is there -- it becomes the baseline. And it allows them to make more accurate revenue projections.

Re:Get used to it, this is the future

[CastrTroy]

Personally I'm OK with paying for a music subscription. There's so much music out there, that I couldn't hope to own even a tiny fraction of the good stuff if I was buying everything by the album. Music services cost about $10 a month. For that I'd be lucky if I could buy a single album every month. After 10 years of buying 1 album a month, I would still only have 120 albums. That's a pretty small selection of music as far as I'm concerned. Esepcially when you consider that you wouldn't always select the best option 100% of the time. After 10 years, probably only 80% (96) of the albums would be worth listening to. And that's being generous as far as how good I am at picking up albums. Then there's the problem of multiple good albums coming out in the same month. Do you buy 3 albums one month, and spend a lot of money, leaving you with no new albums for the next 2 months? Or you could just pay $10 and have access to just about everything.

Right now, my only complaint is that they don't have absolutely everything. I think there would be a decent market for a service that cost $20 and had absolutely everything, but the music labels won't let that happen. It would probably even be a good deal at $30. Same goes for Netflix. I would probably pay many more times the current rate if they had everything. $40 or $50. Most people were/are paying more than that for cable already, and they still weren't getting everything.

I think that all media bought on subscription is a pretty good deal, provided it makes it cheaper to access more. Personally I don't ever tend to read a book more than once, because it takes so much more time than any other kind of media, and there's just so much good content out there. I really don't see any value in owning a book.

Re:Get used to it, this is the future

[torkus]

So you're actually *complaining* that the carriers finally separated out the cost of the phone from the cost of their service?

Apple pretty much had to

[hsmith]

Carriers are moving away from subsidized phones due to changes they are making to make more money off of you. Due to this, it puts sales of shiny new phones at risk.

With Apple's leasing you the phone plan, it completely makes this irrelevant. Not many people want to shell out $700 for a new phone, but $30 a month they don't have to realize they are paying $200 in interest. It is silly human psychology.

They had to do it to keep things going.

Re:Apple pretty much had to

[jandrese]

The cost is pretty much exactly new phone and Applecare + for the year. Apple is offering what is effectively a 0% interest loan. It's a bad deal if you don't want to upgrade every year, but for people who absolutely must have the new shiny and spring for the insurance it is break even.

Re: Who cares

[Anonymous Coward]

So, all of Slashdot, then!

Dumbest article ever

[Maury Markowitz]

Let's see, Apple does *exactly* what everyone else is already doing, for a slightly lower cost, with clearly defined terms and nothing hidden in the price, and slightly improved conditions (AC+).

Apple is evil. ::rolleyes::

Depends on lots of factors

[xtal]

I sell my phone every 18 months. Technology is moving fast.

It's closer to break even (with AppleCare) than you might suspect; the variance will be on the policies around damage, wear, replacement, etc.

Also consider the out of pocket on taxes - my 128GB phone cost me around $1000 out the door here in Canada. (15%)

I think it's ~$20/mo depreciation over a 2 year period vs. $34/mo they're taking, but my time is worth something, and if they make it headache free - it's not as crazy as it might seem at first when you run the numbers. I'm already paying $120/mo all in for service - yay Canada.

Over 4 years? The depreciation is very high - it's stupid to keep the phone this long if you want a new one.

If things get so grim $14/mo is a problem, no, this service isn't for you - but it's not as crazy as you might first think. I'll probably take them up if the price differential isn't too crazy here over the US.

If this catches on

[Marginal Coward]

If this catches on, I bet the car companies will be doing it soon. Imagine a scheme in which you pay a monthly fee for the use of a car, though you never actually own the car. If they put their minds to it, I bet the car folks could even get people to pay some sort of large, up-front fee for the car they'll never own. (Sweet!) And as an inducement, the deal might include all maintenance, for free. Not only would you save a lot of money that way, you'd never have to worry about replacing the battery. Best part: you never have to buy a car again!

Is it really that bad?

[thedbp]

OK, so $27.45 * 24 months is $658.80, that's $109.80 more expensive than the unlocked iPhone by itself. AppleCare+ is included, that's $99, so that brings the leasing premium down to $10.80 over the course of two years in Apple's pocket for financing the hardware. And then, halfway through the 24-month financing period, you get an upgrade to the latest device. Sounds legit to me, and a much better deal than carriers are offering.

If you purchased outright each year, you'd spend $648 the first year, $648 the second year, but get back approx. $300 for selling your previous-gen iPhone, bringing the total hardware cost over 2 years to $996.

This program also puts a whole lot more power into the hands of the consumer, as they are unlocked and can be used on any network. If more and more people are using unlocked phones, we might actually see some real competition in the wireless industry when it comes to things like customer service.

Depreciation for independent contractors

[bidule]

I know independent contractors in Canada who'd rather rent their car and computer because the cost is 100% deductible on the first year. Buying thing means dealing with depreciation and getting your tax break later.