Samsung plans to follow Apple's lead again, offer smartphone financing program
As carriers look to move away from contract subsidies, Apple has begun offering its own iPhone installment plan, and rival Samsung may opt to do the same, according to a new report.
Citing an industry executive familiar with Samsung's plans, Fortune reported that Samsung plans to launch a smartphone leasing program "in the next several months," or perhaps sooner. Such a move would make it easier for users to spread the cost of a new Samsung phone out over a period of time, rather than paying hundreds of dollars up front.
For years, particularly in the U.S., new smartphone purchases were accompanied by a two-year service contract which allowed handset makers like Apple and Samsung to offer their devices at what appeared to be a low price, like $199, even though the actual price of the smartphone was around $650.
But in recent years, carriers have begun to move away from those plans, and instead offer customers the ability to spread the full cost of the smartphone out over a period of time up to two years. Though the customer now pays the full price for the handset, the phones remain locked to the carrier.
Apple has countered this move with the iPhone Upgrade Program, an interest-free two-year loan that allows customers to spread the cost of an iPhone, plus an AppleCare+ warranty, over a two-year period. Unlike with carrier plans, Apple's plan offers an unlocked handset, allowing users to switch carriers at any point if they so choose, and it also allows users to trade in their phone toward the latest model after one year of payments.
Market watchers have heaped praise on Apple's new initiative, suggesting the program will help to drive annual upgrades, and also give Apple a greater amount of control over the customer experience, wresting it away from carriers.
Samsung, of course, has a storied history of following Apple's lead, particularly with respect to the design of smartphone hardware and software. Judges and juries have agreed with that assessment, leveraging fines against Samsung for copying Apple's patented designs for the iPhone and iPad.
Last month, Samsung also began offering an "Ultimate Test Drive" program that paid users cash for trying and ultimately switching to one of the company's latest Galaxy phones. The offer includes up to $100 in Google Play credit, as well as a check for up to $100.
Citing an industry executive familiar with Samsung's plans, Fortune reported that Samsung plans to launch a smartphone leasing program "in the next several months," or perhaps sooner. Such a move would make it easier for users to spread the cost of a new Samsung phone out over a period of time, rather than paying hundreds of dollars up front.
For years, particularly in the U.S., new smartphone purchases were accompanied by a two-year service contract which allowed handset makers like Apple and Samsung to offer their devices at what appeared to be a low price, like $199, even though the actual price of the smartphone was around $650.
But in recent years, carriers have begun to move away from those plans, and instead offer customers the ability to spread the full cost of the smartphone out over a period of time up to two years. Though the customer now pays the full price for the handset, the phones remain locked to the carrier.
Apple has countered this move with the iPhone Upgrade Program, an interest-free two-year loan that allows customers to spread the cost of an iPhone, plus an AppleCare+ warranty, over a two-year period. Unlike with carrier plans, Apple's plan offers an unlocked handset, allowing users to switch carriers at any point if they so choose, and it also allows users to trade in their phone toward the latest model after one year of payments.
Market watchers have heaped praise on Apple's new initiative, suggesting the program will help to drive annual upgrades, and also give Apple a greater amount of control over the customer experience, wresting it away from carriers.
Samsung, of course, has a storied history of following Apple's lead, particularly with respect to the design of smartphone hardware and software. Judges and juries have agreed with that assessment, leveraging fines against Samsung for copying Apple's patented designs for the iPhone and iPad.
Last month, Samsung also began offering an "Ultimate Test Drive" program that paid users cash for trying and ultimately switching to one of the company's latest Galaxy phones. The offer includes up to $100 in Google Play credit, as well as a check for up to $100.
Comments
Of course! Apple thinks up a simple idea that works, Samsung piles on.
But a question I have is, do you really need AppleCare+ if you're going to be upgrading your phone every year? Doesn't the phone already come with a 1 year warranty?
In my case .. YES... Rarely make it a year without breaking it.
How exactly is this Apple's lead when Apple is essentially implementing what carriers are already doing. I'm currently on AT&T Next which is very similar to Apple's upgrade program.
But a question I have is, do you really need AppleCare+ if you're going to be upgrading your phone every year? Doesn't the phone already come with a 1 year warranty?
AppleCare+ covers accidental damage where as when you buy from a carrier you don't have that!
So...how much per month will they be paying people to use their phone for the next 2 years?
Motorola has been doing this before Apple, so no, Apple is not the first. Apple followed Motorola.
How exactly is this Apple's lead when Apple is essentially implementing what carriers are already doing. I'm currently on AT&T Next which is very similar to Apple's upgrade program.
But a question I have is, do you really need AppleCare+ if you're going to be upgrading your phone every year? Doesn't the phone already come with a 1 year warranty?
Unless I am mistaken, You actually get AppleCare free with AppleUpgrade when compared to ATT Next if you are exchanging your phone every 12 months.
Consider iPhone 6s 64 $749
AppleUpgrade (Includes AppleCare) - Exchange every 12 month (payments for 24 otherwise)
$36.58/month. Due at signing taxes
Total Paid 12 months (With AppleCare) $438.96 + taxes
Total Paid Full Term (24 Months) $877.92 + taxes
ATT Next - Exchange every 12 month (payments for 20 otherwise)
$37.45/month. Due at signing... taxes and APPLECARE Payment if included.
Total Paid 12 months:
Without AppleCare $449.40 + taxes
With AppleCare $578.40 + taxes
Total Paid Full Term (20 months)
Without AppleCare $749.00 + taxes
With AppleCare $878.00 + taxes
Motorola has been doing this before Apple, so no, Apple is not the first. Apple followed Motorola.
We all know Apple is always first and Samsung copies.
By the way Motorola Financing started Nov 2013 http://www.engadget.com/2013/11/20/motorola-credit-financing-account/
I'm waiting for Samsung's response to an Apple Car:
"S Car" (pronounced "scar")
With the Apple Upgrade, do you trade in your old device back to Apple at the time of your next upgrade (vs. selling it on Gazelle, eBay, etc.)?
But why does it seem like Sammy waits for Apple to do something before Sammy does it?
If it's not paid off and you want a new device yes. You can't sell something you don't own.
IOTW, Motorola wasn't first.
Companies follow what other companies do all the time. One month they follow one company, and a few months later they follow another, but you're absolutely right that Samsung only follows what Apple does. Pathetic isn't a strong enough word to describe it.
No, it's not exactly the same. The financing part is similar, and while they do have a trade-in program it's not just for Moto phones.
What is the APR for Apple's program if not paid off in 24 months? Looks like Motorola's was 28.99%. Also is this exactly the same program? I don't see anywhere on Moto's site where you can trade in your device for a new one after 12 months.
It's a set payment plan applied to your credit card each month. They haven't released details but if your credit card is full or cancelled, there would likely be fees/penalties and interest. More details will emerge soon.
Apple has no APR - it's an interest free loan, not a tricky way to get a credit card like Motorola Financing. So,also no trade-in/early upgrade option.
IOTW, Motorola wasn't first.
It's an installment loan so you could probably opt to pay it off anytime then do as you please. We'll see when the contracts are released