iPhone Upgrade Program could eventually open up beyond Apple Stores, Tim Cook says

Posted:
in iPhone edited October 2015
Apple would eventually like to expand its new iPhone Upgrade Program so that shoppers can sign up for it without having to come into an Apple Store, Chief Executive Tim Cook said this week.




"We actually solved that problem back in 2007. But then quickly had to change it in order to scale in a major way," Cook said during Tuesday's fourth fiscal quarter earnings call, making reference to the first-generation iPhone, which was sold unsubsidized.

As it turns out, Apple was actually ahead of the curve in 2007 by selling an unsubsidized phone. At the time, users could set up the handset entirely on their own at home after a purchase.

But the following year, with the launch of the iPhone 3G, purchases became largely subsidized through carrier AT&T in the U.S., making the process more complex. For several months, in fact, buyers had to activate their new iPhone 3G in-store, even if they bought it online.

If an iPhone 3G was purchased and not activated within a set period of time, the customer would pay an early termination fee to reimburse the cost of the subsidy --?a strategy intended to prevent users from buying, jailbreaking and unlocking the device, which was exclusive to AT&T for years.

Though Apple relented and opted for subsidized pricing starting with the iPhone 3G, in the years since carriers have since moved away from contract subsidies while offering lower monthly rates. Now, carriers prefer that the customer pay the full cost of the iPhone --?starting at $649 for an iPhone 6s.

To soften the blow, the cost of the device can be spread out over an extended period, without any interest, as some carrier plans have done.

Apple's new iPhone Upgrade Program takes it one step further, offering an unlocked, contract-free phone with AppleCare+, with an option to upgrade to a new handset after 12 months of interest-free payments. Most carrier installment plans are for locked phones.

The Apple iPhone Upgrade Program is currently accessible only in Apple Stores, presumably due to the financial arrangements involved. Purchasers have to sign up for a 24-month installment period, which is actually an interest-free loan that they must qualify for with a credit check.

Ultimately Apple would like to "have that automated and working with our partners, with service providers," Cook said Tuesday.
«1

Comments

  • Reply 1 of 23
    I would have rather bought on Apple's Plan, but didn't feel like driving to the Apple Store.
  • Reply 2 of 23

    I'm four hours round-trip from the nearest Apple store. My time and mileage are worth far more than the savings of a few dollars in interest I would earn had I kept my money.

  • Reply 3 of 23
    zroger73 wrote: »
    I'm 4 hours round-trip from the nearest Apple store. My time and mileage is worth more to me than a $129 AppleCare+. I also don't want a hard inquiry on my credit file every 12 months just for a telephone.

    Wonder how they handle multiple purchases... Will I get a credit inquiry for every phone? Mine, wife's, kids, etc
  • Reply 4 of 23
    Why not tie it in to our iCloud account? Boom, already approved!
  • Reply 5 of 23
    fallenjtfallenjt Posts: 3,976member
    Why not just use online qualification process just like Barclay finance? Boom... Ordered and shipped.
  • Reply 6 of 23
    Question about the iPhones financed through Apple with this upgrade plan. I keep reading they are free to be used with any carrier so does that mean they have the ability to be used on both GSM & CDMA carriers? Like both antennas in one phone?
  • Reply 7 of 23

    On the earnings call, Tim emphasized several times that the payment plans "begins to look like a subscription" from a revenue-tracking perspective.

     

    I wonder if Apple (over time) will morph to a subscription model:

      - Hardware subscriptions       (Phone, Mac, Watch, Car)

      - Software subscriptions        (1st-party Apps)

      - Service subscriptions           (Music, TV content, Movie content)

     

    Wall Street likes this model.  In fact, one of the analysts yesterday asked Tim if he thought there was a way for Apple to increase its participation in the stock appreciation that other subscription-based providers (such as AWS) have recently experienced.  Clearly Wall Street views such a revenue model as positive, and Apple has the right mix of products to shift in that direction if they'd so choose.

     

    Then, extending something that sog suggested in an earlier post, Apple could simply report on these three subscription revenue streams and not actual device sales.

  • Reply 8 of 23
    nolamacguynolamacguy Posts: 4,758member
    fallenjt wrote: »
    Why not just use online qualification process just like Barclay finance? Boom... Ordered and shipped.

    their system isnt perfect. i make a very good living and was denied by Barclay for some reason when trying to finance a new rMBP. never could get any clear answers.
  • Reply 9 of 23
    Quote:

    Originally Posted by NolaMacGuy View Post





    their system isnt perfect. i make a very good living and was denied by Barclay for some reason when trying to finance a new rMBP. never could get any clear answers.

    There are millionaires out there who wouldn't qualify to buy a refrigerator on credit. One's level of income and one's creditworthiness are two different things. There are wealthy people with bad credit and there are poor people with good credit. There are both wealthy and poor people who have utilized too much of their available credit and get denied for various loans or services despite having otherwise excellent credit histories. By law, anyone denying you credit must mail you a letter with the specific reasons on which they based that decision. This letter entitles you to a free credit report from the credit bureaus. If you truly have no idea why you were denied, then you have either buried your head in the sand or you know exactly why you were denied, but don't want to admit it.

  • Reply 10 of 23
    dasanman69dasanman69 Posts: 12,976member
    zroger73 wrote: »
    nolamacguy wrote: »
    their system isnt perfect. i make a very good living and was denied by Barclay for some reason when trying to finance a new rMBP. never could get any clear answers.
    There are millionaires out there who wouldn't qualify to buy a refrigerator on credit. <span style="line-height:1.4em;">One's level of income and one's creditworthiness are two different things. There are wealthy people with bad credit and there are poor people with good credit. There are both wealthy and poor people who have utilized too much of their available credit and get denied for various loans or services despite having otherwise excellent credit histories. </span>
    <span style="line-height:1.4em;">By law, anyone denying you credit must mail you a letter with the specific reasons on which they based that decision. This letter entitles you to a free credit report from the credit bureaus. If you truly have no idea why you were denied, then you have either buried your head in the sand or you know exactly why you were denied, but don't want to admit it.</span>

    I think we've all frolicked, and splashed the waters of the Nile at one point or another. :lol:
  • Reply 11 of 23

    This is a very good plan that will ensure more people get the latest Apple products.

  • Reply 12 of 23
    nolamacguynolamacguy Posts: 4,758member
    zroger73 wrote: »
    There are millionaires out there who wouldn't qualify to buy a refrigerator on credit. <span style="line-height:1.4em;">One's level of income and one's creditworthiness are two different things. There are wealthy people with bad credit and there are poor people with good credit. There are both wealthy and poor people who have utilized too much of their available credit and get denied for various loans or services despite having otherwise excellent credit histories. </span>
    <span style="line-height:1.4em;">By law, anyone denying you credit must mail you a letter with the specific reasons on which they based that decision. This letter entitles you to a free credit report from the credit bureaus. If you truly have no idea why you were denied, then you have either buried your head in the sand or you know exactly why you were denied, but don't want to admit it.</span>

    pull your head out of you....sand. im well aware of how it all works, ive written credit application systems for household-name banks. what im saying -- A) i have good credit. B) their reasons werent clear as the letter was ambiguous. by then id already bought it cash and didnt feel like navigating their maze; exactly as designed, i might add.

    there would be zero reason for me to lie to a bunch of random strangers about why i was denied. but thanks for playing psychologist.

    next!
  • Reply 13 of 23
    dcgoodcgoo Posts: 211member
    supadav03 wrote: »
    Question about the iPhones financed through Apple with this upgrade plan. I keep reading they are free to be used with any carrier so does that mean they have the ability to be used on both GSM & CDMA carriers? Like both antennas in one phone?

    Yes. But it has been that way for quite some time. Not new with the 6s
  • Reply 14 of 23
    I thought this was the first year Apple big financing? Or are you just referring to unlocked iPhones always having duel antennas? (If so, I never knows that). If this is the case I'm 100% getting my next iPhone though Apple. Probably wait for the 7 as I am very happy right now sigh my 6 Plus
  • Reply 15 of 23
    dasanman69dasanman69 Posts: 12,976member
    supadav03 wrote: »
    I thought this was the first year Apple big financing? Or are you just referring to unlocked iPhones always having duel antennas? (If so, I never knows that). If this is the case I'm 100% getting my next iPhone though Apple. Probably wait for the 7 as I am very happy right now sigh my 6 Plus

    I believe that the OP meant iPhones with both CDMA and GSM radios. That was first available on the iPhone 5.
  • Reply 16 of 23
    latifbplatifbp Posts: 544member
    zroger73 wrote: »
    I'm four hours round-trip from the nearest Apple store. My time and mileage are worth far more than the savings of a few dollars in interest I would earn had I kept my money.
    It's interest free
  • Reply 17 of 23
    latifbplatifbp Posts: 544member
    dasanman69 wrote: »
    I believe that the OP meant iPhones with both CDMA and GSM radios. That was first available on the iPhone 5.
    4s
  • Reply 18 of 23
    ksecksec Posts: 1,551member
    Quote:

    Originally Posted by Slprescott View Post

     

    On the earnings call, Tim emphasized several times that the payment plans "begins to look like a subscription" from a revenue-tracking perspective.

     

    I wonder if Apple (over time) will morph to a subscription model:

      - Hardware subscriptions       (Phone, Mac, Watch, Car)

      - Software subscriptions        (1st-party Apps)

      - Service subscriptions           (Music, TV content, Movie content)

     

    Wall Street likes this model.  In fact, one of the analysts yesterday asked Tim if he thought there was a way for Apple to increase its participation in the stock appreciation that other subscription-based providers (such as AWS) have recently experienced.  Clearly Wall Street views such a revenue model as positive, and Apple has the right mix of products to shift in that direction if they'd so choose.

     

    Then, extending something that sog suggested in an earlier post, Apple could simply report on these three subscription revenue streams and not actual device sales.


     

    That is exactly what i said in some earlier post. Except my model would be a single Apple subscription that includes Hardware & Software & Services. The numbers will properly breaks out in the Annual Conference, but I think it would be better to lump all together as an Apple Experience.  

     

    However I do not like the Hardware like Watch and Mac to be Subscription based. May be for the Enterprise ( since they like this model and its easier to put on Opex ) The iPhone works because the iPhone needs Mobile Connection, which is in itself a monthly fees.

    The Mac and Watch has nothing to associate them to.

  • Reply 19 of 23
    ksec wrote: »
    That is exactly what i said in some earlier post. ...
    However I do not like the Hardware like Watch and Mac to be Subscription based.
    Thanks, ksec. I hadn't seen your post, or maybe it inspired me!

    You're right that a subscription fee for Watch and Mac feels kinda forced & unnecessary. In general, it'll be interesting to watch whether Apple increases its move toward subscription-like payments.
  • Reply 20 of 23
    Quote:

    Originally Posted by latifbp View Post





    It's interest free

    Yes, I know the loan is interest-free. That's why I said what I did. If I kept that $1,000+ to myself and used the AIUP, my $1,000+ would earn a few dollars in interest while I paid about $40+ per month.

Sign In or Register to comment.