Microsoft launches 'Surface Plus,' adapting iPhone Upgrade Program concept to PCs
Microsoft on Tuesday introduced "Surface Plus" and "Surface Plus for Business," two ownership plans that appear to mimic Apple's strategy with the iPhone Upgrade Program.
The standard option lets people buy a Surface computer on a 24-month contract, but upgrade after the 18-month mark as long as they're in good standing, return their previous computer, and sign up for a new 24-month plan. There's also 0 percent APR unless someone takes longer than 24 months to pay, at which point the APR jumps to 19.99 percent.
Shoppers have to sign up for Plus through microsoft.com or a Microsoft Store, at which they get a year of free support. An extended Complete service plan costs extra.
The Business plan comes with Complete for Business, and offers a number of other perks, such as the ability to add multiple devices to a single plan -- including the 55-inch Surface Hub. Customers can choose from 18-, 24-, and 30-month plans, and upgrade as quickly as 12 months on a 24-month contract, or 18 months on a 30-month term. Devices can be added or removed midstream.
For an extra $8.25 per user, per month, the Business plan also offers Office 365 for Business subscriptions.
The iPhone Upgrade Program -- launched in Sept. 2015 -- costs at least $32.41 per month under a two-year contract, but includes a new iPhone every year along with an AppleCare+ warranty. Like Surface Plus, subscribers are required to trade in their old device when they upgrade.
Microsoft has largely abandoned the phone business, but is more directly competing with Apple's Macs by way of the Surface Laptop, the Surface Pro, and to a lesser extent the Surface Book and Surface Studio. There is no equivalent "Mac Upgrade Program."
The standard option lets people buy a Surface computer on a 24-month contract, but upgrade after the 18-month mark as long as they're in good standing, return their previous computer, and sign up for a new 24-month plan. There's also 0 percent APR unless someone takes longer than 24 months to pay, at which point the APR jumps to 19.99 percent.
Shoppers have to sign up for Plus through microsoft.com or a Microsoft Store, at which they get a year of free support. An extended Complete service plan costs extra.
The Business plan comes with Complete for Business, and offers a number of other perks, such as the ability to add multiple devices to a single plan -- including the 55-inch Surface Hub. Customers can choose from 18-, 24-, and 30-month plans, and upgrade as quickly as 12 months on a 24-month contract, or 18 months on a 30-month term. Devices can be added or removed midstream.
For an extra $8.25 per user, per month, the Business plan also offers Office 365 for Business subscriptions.
The iPhone Upgrade Program -- launched in Sept. 2015 -- costs at least $32.41 per month under a two-year contract, but includes a new iPhone every year along with an AppleCare+ warranty. Like Surface Plus, subscribers are required to trade in their old device when they upgrade.
Microsoft has largely abandoned the phone business, but is more directly competing with Apple's Macs by way of the Surface Laptop, the Surface Pro, and to a lesser extent the Surface Book and Surface Studio. There is no equivalent "Mac Upgrade Program."
Comments
This may be confusing. If you payoff the device—which you have the choice to do any time—you aren't required to hand in your device when you sign up again for iPUP. It's yours free and clear. I assume it's the same with MS' program.
Lots of misconceptions about the service and too many assumed entitlements for simply being offered an additional payment option.
And maybe Apple is the first to offer this on mobile devices, but they certainly aren't the first to offer this sort of program.
As an aside, I really don't see Microsoft as much of an Apple competitor anymore, so what they do is of second-order consequence to anything that Apple might want to do (or does).
The lease/buy part is AOK in general. The only issue is Microsoft doing it unless they allow OEMs to roll over the laptop license eternally from one laptop to a new one. If that's the case, then they will be on the same footing as Microsoft and then its OK for Microsoft to do this. I somehow doubt that would be the case.
So, this will end up in court in the EU; just watch.
Apple has a loan system for monthly payments in some regions but this is to pay it up entirely over that period:
https://www.apple.com/uk/shop/browse/finance/loan
If they take the machine back then the monthly payments would only have to be the depreciation over that period. Entry level refurbs of Macbooks could go down to ~$600, which would make it a lot easier to choose between that and a cheap PC. A 2 year old Mac is still better than a new PC.
The program can cross over devices too so desktop users can migrate to laptops or even iPad Pros if they decide they no longer need a Mac. It gets round hardware stagnation where people just hold onto hardware for 8 years or more because they don't need to upgrade. If upgrading was trivial and people got used to doing it then average refresh cycles would improve and the overall userbase can expand with a wider range of price points.
There's some risk in offering payment plans vs upfront payments but they have enough resources to handle this and they can charge a bit more for the monthly options while still being better value to each buyer.
https://www.apple.com/retail/business/financing/
2) You'd really want to buy a Mac at full price over two years and pay full price again and hand in your Mac every year? That sounds pricey since I don't replace my Mac every year. I tend to do with my iPhone, which is why it makes sense.
Fascinating! The subscription model extending to hardware (yes, Apple is also doing it with the iPhone).
I guess it makes sense for businesses or freelance pros.
I wonder if I will be the last of a dying breed that isn't comfortable with the fact that I don't own something I'm using. The world is moving forward and leaving people like me behind!
https://www.apple.com/retail/business/financing/
https://www.apple.com/uk/shop/browse/finance/loan
Microsoft is charging the full price over 2 years too, which I don't think makes sense in Apple's case as the product doesn't depreciate that quickly. In Microsoft's case it does.
The products would be the same price, it's just like the iPhone upgrade program. They charge $32.41/month for that so you only pay $389 of a $650 phone, trade it in and get a new one every year. For a Mac, I wouldn't expect people to upgrade every year but every 2 years is ok and they can assume that the device won't depreciate 50% in just 2 years but they can charge 50% over 2 years and when they get it back, they sell it for the remainder as a refurb.
It makes no difference to Apple really:
- how it's done now is someone would buy a Macbook for $1299 up-front. They own it for 2 years and it's worth about half:
http://www.ebay.com/itm/Apple-MacBook-A1534-12-Laptop-MJY32LL-A-April-2015-Space-Gray-Fully-functional-/253050339794
$765/1299 = 58%, roughly 25% depreciation every year.
They sell it on eBay and pay 10% fees and the buyer gets a used product, usually without warranty.
- the alternative would be Apple sells the Macbook for half the price split over 2 years so $650/24 months = ~$29/month. After the 24 months, they paid $696 of a $1299 machine and the machine is worth ~$730. Apple takes it and sells it for $730 or thereabouts. In the 2 years, they have been paid $1426 for a $1299 Macbook but the first buyer didn't have to bother selling on eBay, they only paid for half the machine at a low monthly rate and the second buyer got a good deal on a used MB and knows they can trust buying from Apple.
There are risks of getting damaged machines back but mostly that will be cosmetic and they can mandate insurance with the monthly option to cover accidental damage and theft. It means more Mac users and that has a knock-on effect for mobile devices. Every device can have a GPS that pings Apple's servers once a day on connection to a network at the firmware level so if people don't pay, they know where the product is.
It would still be an ownership model, it's just pay-up-to-own vs pay-all-at-once, like with the iPhone (or a mortgage or car payment plan). You can pay it off and keep it, it's not that you'd be renting the hardware.
Most iPhones have been sold this way since the first model. The carrier buys the phone and sells it to the buyer at a monthly rate including the network cost. You eventually own the phone after paying it up:
https://www.att.com/cellphones/iphone/apple-iphone-7.html#sku=sku8040300
If everyone had to buy iPhones by paying the full cost upfront, hardly anyone would have bought them. This is why Ballmer laughed at the iPhone originally because he didn't see that they could easily get round it with the pricing model:
http://www.businessinsider.com/steve-ballmer-just-praised-apple-2016-11
"I wish I had thought of the model of subsidizing phones through the operators. People like to point to this quote where I said the iPhones will never sell. Well the price of $600 or $700 was too high and it was business model innovation by Apple to get it essentially built into the monthly cell phone bill."
People see the $2000+ price tags on Macs and it's too much for people on fixed incomes to save that much, they may only have ~$200 disposable income every month. If they saw an option for $29-45/month, it immediately fits into their disposable income.