Here's a thought...
You want to buy a new car -- you basically have 3 options:
- pay cash
- finance over time with a cash discount
- finance over time at a percentage interest rate
You can negotiate price and/or accessories and services included in the package.
The dealer gets paid, the manufacturer gets paid and any "financing" is assigned to a 3rd-party -- who collects the payments and assumes the risk any any additional recovery costs if the buyer stops paying or skips.
Now, what if you could buy an unlocked iPhone under contract...
Say, from the iTunes store...
- You choose to finance it at 0% interest for 18 months
- $49 up front and 18 payments of $27.78
Now, Apple can assign the financing/risk to a finance company * -- but act as the agent to collect
payments -- through the iTunes store.
The finance company buys the contract from Apple at the wholesale price plus interest.
* or, possibly find a company flush with $ billions in cash...
So, for $49 up front and $27.78 per month the consumer gets an iPhone and all that it entails.
He can shop around and buy phone services prepaid or under contract -- whatever suits him best.
Now, here's an amazing consideration unique to the iPhone. There is very little risk to Apple or a financing agent: If the user skips or doesn't pay his bill the device becomes unusable (grace period and emergency call assumed).
What's not to like?