Apple's iPhone upgrade plan helps the company rake in more money per phone
Leasing the next-generation iPhone every year is a very competitive business, one that Apple is joining
During last week's new products announcement, Apple introduced a new plan that would allow someone to pay $32 a month for the Apple iPhone 6s, and exchange it for the newest version of the phone every 12 months. The key to the plan is that the customers signing up for it are leasing the iPhone, as opposed to making a downright purchase of the handset. This means that the phone has to be returned in good condition.
The leasing program also helps Apple with another metric that had started going against it. From 2013 to now, the upgrade cycle for the iPhone has been stretched out to 26 months from 22 months. But the leasing program offers an upgrade every 12 months, and while not everyone subscribed to the program will take advantage of it, there should be enough that do, allowing Apple to see the iPhone upgrade cycle drop substantially over the next 12 to 24 months. Daryanni, the RBC analyst, says "You essentially create a certain group of your user base that is going to be on a 12-month upgrade cycle."
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source: Barron's
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