The iPhone 6s and 6s Plus went on sale in the wee hours this morning (just after midnight Cupertino time) and demand is already making a pretty large dent in availability.
If you order on-line for delivery, the waiting time for some phones is already at 2-3 weeks (for delivery between September 26th and October 3rd).
The in-store pickup program is for September 25th only. If you go that route, note that the 128 GB iPhone 6s Plus is already unavailable in many markets, no matter the color or carrier. In my area, the 128GB 6s is only available in a few stores, and in a single color.
If you do go with in-store pickup, consider joining Apple’s iPhone Upgrade Program.
In a nutshell, you agree to pay a monthly fee, to Apple (actually to Apple’s bank partner, Citizens Bank, N.A., doing business as Citizens One), for a minimum of 24 months. The fee is based on the phone you choose. As an example, if you buy a 128 GB iPhone 6s Plus, you’ll pay $44.91 a month. If you bought that phone outright, you’d pay $949, plus $129 for Apple Care+.
Some math:
– Upgrade Program price: $44.91 x 24 months = $1,077.84
– Pay Up Front price: $949 + $129 = $1,078
As you can see, these prices are pretty much the same. But the Upgrade Program has a terrific side benefit. Let’s say Apple comes out with a new phone in a year (not a lock, but a reasonably safe bet). After 12 months, you are free to switch to any other phone that Apple sells. You trade in your phone (straight trade, no money changes hands) and get your new phone, start a new Upgrade Program agreement at the price associated with that new phone.
With the Pay Up Front program, you keep your old phone, which you can pass along to someone else, or trade in or sell when you are ready to buy a new phone.
With the Upgrade Program, you don’t get any money for your trade-in, but if you trade in after a year, you no longer continue to pay for that old phone. In our example, with a trade-in after one year:
– Upgrade Program price: $44.91 x 12 months = $538.92
If you swap phones every year, this is definitely worth considering. When you do your own math, don’t minimize the value of your used phone. After all, Apple will no doubt take that same phone and refurbish/resell it. Selling a used iPhone is relatively easy to do.
Also, consider how important AppleCare is to you. If you are very careful with phones and willing to chance going without insurance, that should factor into your decision. With the Upgrade Program, AppleCare is included and is not optional.
UPDATE: Here’s a link to the legal agreement, which provides a few more details. [H/T Jarrod David]
Thanks for the math, Dave! I know it’s still early days and all the details haven’t been out long, but there are lots of Apple-centric podcasts that are getting this all wrong and proclaiming Apple’s program a bad deal.
I commented on this 20 minutes ago, my comment was deleted?
Not sure what happened, but no one on this end deleted anything (we rarely do). Sorry that happened.
I buy an unlocked iPhone with AC every two years. For me, it’s a no brainier.
Apple knows this and it should be pretty profitable for them, which is fine. Also, a lot of people are gambling with life insurance that they will only use once 😉
For me there is kind of two parts to it. One is that I’m an outlier since I’m a major league klutz and I travel. When I say klutz I mean that I once injured myself reading Ikea instructions. And when I say travel I mean that I travel a lot. Like ~200 flights per year.
Second is the convenience. Yes, you can get insurance from someone else or whatever. Recently my iPhone screen was smashed. I set it on the gate counter at an airport and a teenager behind reached over and knocked it off. Before I got on the plane I booked an Apple Store appointment in the city I was flying to and it was fixed that night. For me the combination of Apple Care + Apple Store service is the selling point.
I get massive amounts of purchase insurance from credit cards but it’s a time consuming hassle that I don’t need. Apple Care is the only “extended warranty” that I ever purchase.
The included AppleCare+ is what really tempts me. I have a 6+ and don’t see anything in the 6s+ that I really requires the upgrade, but I’m still tempted…
er? it’s not a safe bet — it’s a lock. new phone, every year. since 2007. not changing anytime soon.
It’s not clear to me if you will get stuck with ATTs upgrade fee or not. Does anyone know?
Also, reading through the legalese, I thought it was interesting that there is essentially an out if you decide you want out after 12-months and don’t want to upgrade. You can upgrade and then return the new phone. Any difference between the fair value of the trade and the remaining payments is then either charged to you or returned to you. Also, if you don’t get in on day one, but you want to upgrade on day one next year, you can accelerate your payments such that you have paid 12-months worth and then be eligible.
I wonder about this too. I have an AT&T family share plan, which comes with a discounted per-line rate. If I replace a phone by upgrading through AT&T Next, I don’t lose the discount. Ditto if I purchase the phone outright elsewhere, or if I reuse a phone I already own. I lose the discount if I upgrade via the old two-year contract method.
Not sure what doing it through the Apple program does. Do I own the phone straight out, or not until I’ve finished paying for two years? Intuitively it seems like up it shouldn’t matter: AT&T isn’t paying for the phone, isn’t offering me the loan, so to them it should be just an unlocked phone I’m buying. But who knows, AT&T may just say no because they can.
Until I know, I don’t know.
If you have a business which pays the monthly fee for the phone, who owns the phone? Apple so it’s a lease or the your business so it’s a capital asset?
Your totals don’t include the money you receive back when you sell your old phone. And every other year I can still get subsidized price. The match then becomes this, assuming $475 return on each phone (what Gazelle offered for a 128 GB 6 Plus just prior to the keynote) and the $499 subsidized contract price every other year:
Upgrade program price: $44.91 x 24 months = $1077.84 ($538.92 a year)
Subsidy + buying outright – old phone sales plan: $499 + $949 + $129 = $1577 – $475 – $475 = $627 ($313.50 a year).
And Amazon offered up to $560 for the same phone, which would bring it down to $228.50 each year. Plus many people sell theirs on eBay or Craigslist for even more.
Admittedly, you’re perpetually locked into a 2 year contract, but who honestly changes their carrier that often? My bill wouldn’t drop just because I’m not under contract. And the carrier payment plans are still a contract, though you’re paying off the phone when you switch rather than an early termination fee.
The value of even the highest priced iPhone is well below the threshold for a capital asset (in the US at least), so even if it is purchased outright, it will be an expensed item.
There was a 15 month gap between the iPhone 4 and 4S, so conceivably, if something like that happened again, it would put the iPhone 7 in 2017 and leave 2016 as The Year of No iPhone.
WILL it happen? Not really likely, barring some major catastrophe (like Foxconn and other manufacturing plants being severely damaged by a natural or manmade disaster), but Apple could also decide for whatever reason that they want new iPhones at the start of every new calendar year.
The point is that nothing is a lock.
Dave every time I want to re-post the comment it will get deleted after 5-10 minutes
and a meteor could smash into the earth.
it’s a lock.
Clever concept. Brings more buyers to Apple Stores, and should give them plenty of refurbished devices for developing markets; maybe enough to eliminate the need to keep four year old phones on life support. Will also attract a lot of prepaid customers in countries where prepaid plans are favored.
Offering something similar for iPads could do wonders for upgrade cycles, I guess.
And, for the mildly curious, here’s an interesting blog which simply tracks the sate of availability in several countries. And yes, I am linking to it because it’s from a fellow Irishman! 🙂
http://iphone-inventory.blogspot.ie/2015/09/iphone-6s-pre-order-tracker.html
That depends on the continued existence of subsidies. But even in their presence, on my plan there’s a discount I lose if I use a subsidy, to the tune of $25 a month, which adds another $300 a year.
Well, since I already gave you an example of when Apple has put enough space between iPhones to leave an entire calendar year empty, I’m a little more confident in that than an end-of-days scenario.
But continue splitting hairs over an inconsequential portion of the piece, if you’d prefer.
Everything depends, but remember that an unlocked iPhone typically retains about 50% of its value at the 12 month mark. I have repeatedly bought an unlocked iPhone each year and used off-contract services (like T-Mobile). Annually, it costs me about $1200/yr once you incorporate the monthly fees, purchase of the iPhone, and then the residual value of the iPhone that you can sell. This Apple plan isn’t bad at all, because it incorporated AppleCare+ and saves you the hassle (and risk) of selling the device.
Life insurance … the company is betting you’ll live forever and pay in more than you’ll withdraw. You’re betting you’ll die soon and cash out first. Either way, you lose.
It should be called death insurance.
If the iPhone loses more than half it’s value after one year then this is a good idea.
Can you copy the text of your comment and email it to me (dmark@loopinsight.com)? I’ll take a look. Must be something in the comment itself, since these comments are going through.
Sure I’ll send it right now, there is nothing wrong in the comment, just my hones opinion.
You are basically paying for this via a credit card. So you own it outright as much as you do if you use your Amex. The only difference is the no interest and the systematic deal that if you hand your phone over to Apple, Citizen’s gets told you did so you don’t have to pay off said phone. It’s basically their ‘reuse and recycle’ program but instead of a gift card you get an account credit.
given ATT dropping two year contracts being sold by anyone but their own corporate stores, it looks like they are phasing them out.
and these plans are about folks being able to upgrade every year. ATT etc are also dropping their half subsidy pricing so now its becoming $199 when you start the contract and $649 for every day after that until a good 22 months later. So if you are lucky you can get $150-200 in trade in money but that’s still a chunk of cash to pay.
or more devices to be reconditioned into service parts. either way its a plus for Apple.
Heck they could go into a business of doing proper reforms and selling them to Assurion etc for those carrier insurance programs. I have a friend that got one of said such phones and it was jacked extreme. third party screen, third party battery. someone had even replaced the logic board. Who knew that Apple can and does cross verify the logic board is the one that is supposed to be in the unit according to the engraved IMEI on the back. My friend ended up with a jacked up refurb that he couldn’t get service on with Apple because the third party parts are considered modifications and voids all right to service. And his carrier gave him hell over his demand for another phone without having to pay a deductible. Having Apple prove those phones would avoid such crap games
It is important to not that most people can get a lower rate on their phone bill as well if their phone is not under contract. This will save you $300 per year with AT&T.
It depends on your plan and how much data you use. I am still grandfathered into a very old subsidy plan that you come out ahead in if you get a new phone every two years.
I am grandfathered in to the unlimited data plan. I currently pay over $215 for three phones, two of them have unlimited data ($30 per month for data) and one has 3GB for $30 per month plus $30 for unlimited texting. Together we use an average of 5-6GB per month of data. If I were to get the 15GB plan with unlimited everything else and the phones were not under contract it would cost me $145. That is a $70 savings, which almost completely pays for annual upgrades to two phones on the plan. I currently only upgrade one phone every year and the other every two years. The third phone is a 4S and it will remain in use for probably a couple more years at least.
well, the numbers changed..
used to be less per incident.
your numbers make a lot of sense.
but
“cost for an out of warranty repair which is $299.”
just the AC part of AC+ doubles that warranty period.
that $299 won’t cover you if you backed over the phone with a truck… (my friend did, 3 months ago while moving).. he didn’t have AC, but they asked .. he had to buy a new phone.. (but was eligible – so just got new contract with phone.)
the question may be what’s the cost of an out of warranty REPLACEMENT.. depending on degree of damage?
I understand. I was just replying to the poster above, who was modeling a situation that involved subsidies. They may no longer exist soon…but they do right at this moment on AT&T, and if I were to try to purchase an iPhone on such a plan, I would incur that cost that the poster did not include.
In the past I had relied on my credit card’s supplemental damage insurance, but now I wonder if that even applies to either the Apple or AT&T installment plans since the phone is technically being purchased via a third-party financing provider.
How are you getting to $145 for 15GB plus 3 phones? I thought that is closer to $220 (100 +3*40), and that is before taxes. ATT sales people will be very sneaky when they compare these numbers to you if you are in a store. They will strip out FAN discounts or taxes to make the rates looks more favorable.
The $40 per phone price is only for phones under contract. If your phone is not under contract you get them for $15 each. So the $145 is 100 + 3*15.
Can you provide a reference for that? I’m seeing all sorts of online references to cell phone purchases as being a depreciated asset. This is my first year in business, with plenty of revenue and I’m trying to determine whether to buy the new phone outright or get the subscription/upgrade plan.