Apple's iPhone Upgrade Program is More Popular Than Expected

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Posted December 15, 2015 at 3:40pm by iClarified

The latest survey from Piper Jaffray’s Gene Munster reveals that Apple's new iPhone Upgrade Program is more popular than initially predicted, reports Fortune.

Back when the program was first introduced Munster predicted that 15% of new iPhone customers would opt in on what is basically a 24-month lease. That may have been way off the mark.

In a note to clients issued late Monday, Munster reported that of 188 iPhone 6S buyers surveyed in mid-November, 70 people (37%) chose the new program. By the end of the quarter, Munster believes, the actual rate could turn out to be as high as 50%

The iPhone upgrade program gives customers AppleCare+ and the option to trade up to an iPhone 7 next year for 24 monthly payments ranging from $32.41 to $44.91.

Fortune outlines some of the program's benefits to Apple:
● It gets to sell more high-margin AppleCare+ contracts
● It locks customers into the iPhone indefinitely
● It halves, in theory, the iPhone upgrade cycle (to 12 months from 24)
● It builds an inventory of used phones that can be refurbished and resold
● It takes control of, and legitimizes, the grey market for second-hand iPhones
● It unbundles hardware costs from carrier costs
● It leaves cell service complaints clearly in the carriers’ hands
● It could raise, according to RBC Capital, Apple’s iPhone profit margin from 50% to 55%.

More details on the iPhone Upgrade Program can be found here. Munster thinks that eventually 75% of customers will move to an annual upgrade cycle resulting in a 10% increase in sales.

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Apple's iPhone Upgrade Program is More Popular Than Expected

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JuergenWest - December 16, 2015 at 10:45am

The point of this article is that the programme is good for Apple (the company and share holders, not the end consumer) and why. Sounds like a few people missed that.

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clown - December 16, 2015 at 3:46am

Jailbreaking is perfectly legal. The problem is many of these idea are good ideas buy some very smart and intelligent people. Some still in grade school. Then you subsequently learn a big company patents those brilliant minds. The so said big companies claim them as their ideas , and proceed to patent those idea as their own. Its shame because many good jailbreak apps were claimed by others ideas.

clown - December 16, 2015 at 3:42am

How is that deal your paying close to $1000 for a phone that cost less the $400 for all cost.

Kenny - December 16, 2015 at 2:15am

I've been wondering if this was a legal way for them to make jail breaking illegal. It came out very shortly after the verdict was made about jail breaking being illegal since a person owns the device. Well this way it's never your device making them add to the terms jail breaking it is illegal.

stevenlacross - December 16, 2015 at 3:17am

Yeah that's true, but jailbreaking is only software anyways and a dfu restore will fix that

gamerscul9870 - December 15, 2015 at 8:56pm

If he would say this involves ripoff, it's would flat out say that, but really it's not if you get all of what he mentioned about the advantages listed.

joshWUa - December 15, 2015 at 5:22pm

No it ain't, Tmobile jump on demand is way better.

gamerscul9870 - December 15, 2015 at 8:55pm

That's his point. It's just as good as tmobile said upgrade program.

stevenlacross - December 15, 2015 at 4:01pm

Ugh, this pisses me off, why are people so stupid and insist on getting ripped off by Apple?

123 - December 15, 2015 at 4:07pm

Because it's not getting ripped off if the value you get warrants the price. Sure iPhones are expensive and the profit margin may be high but I have tried other phones and I would never switch from iOS back to Android. I don't think that how much someone earns from the product they sell me should affect my decision on whether to purchase it, surely what matters is whether is what I get good enough for the price.

gamerscul9870 - December 15, 2015 at 4:12pm

Because all that trouble is worth getting the phone that people are calling the best iPhone ever.

stevenlacross - December 16, 2015 at 3:13am

Your not understanding how Apple is ripping people off, I've got iPhone 6s Plus 128gb and I paid full price for it so that I can resell it in a year or two and make back most of my money, but if I were to do payments to Apple, I'd pay off half the phone and then have to give it back to them at which point they would resell it for almost full price and make about 144% profit off that one phone. Hence ripping people off