The latest survey from Piper Jaffray’s Gene Munster reveals that Apple's new iPhone Upgrade Program is more popular than initially predicted, reports Fortune.
Back when the program was first introduced Munster predicted that 15% of new iPhone customers would opt in on what is basically a 24-month lease. That may have been way off the mark.
In a note to clients issued late Monday, Munster reported that of 188 iPhone 6S buyers surveyed in mid-November, 70 people (37%) chose the new program. By the end of the quarter, Munster believes, the actual rate could turn out to be as high as 50%
The iPhone upgrade program gives customers AppleCare+ and the option to trade up to an iPhone 7 next year for 24 monthly payments ranging from $32.41 to $44.91.
Fortune outlines some of the program's benefits to Apple:
● It gets to sell more high-margin AppleCare+ contracts
● It locks customers into the iPhone indefinitely
● It halves, in theory, the iPhone upgrade cycle (to 12 months from 24)
● It builds an inventory of used phones that can be refurbished and resold
● It takes control of, and legitimizes, the grey market for second-hand iPhones
● It unbundles hardware costs from carrier costs
● It leaves cell service complaints clearly in the carriers’ hands
● It could raise, according to RBC Capital, Apple’s iPhone profit margin from 50% to 55%.
More details on the iPhone Upgrade Program can be found here. Munster thinks that eventually 75% of customers will move to an annual upgrade cycle resulting in a 10% increase in sales.
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Back when the program was first introduced Munster predicted that 15% of new iPhone customers would opt in on what is basically a 24-month lease. That may have been way off the mark.
In a note to clients issued late Monday, Munster reported that of 188 iPhone 6S buyers surveyed in mid-November, 70 people (37%) chose the new program. By the end of the quarter, Munster believes, the actual rate could turn out to be as high as 50%
The iPhone upgrade program gives customers AppleCare+ and the option to trade up to an iPhone 7 next year for 24 monthly payments ranging from $32.41 to $44.91.
Fortune outlines some of the program's benefits to Apple:
● It gets to sell more high-margin AppleCare+ contracts
● It locks customers into the iPhone indefinitely
● It halves, in theory, the iPhone upgrade cycle (to 12 months from 24)
● It builds an inventory of used phones that can be refurbished and resold
● It takes control of, and legitimizes, the grey market for second-hand iPhones
● It unbundles hardware costs from carrier costs
● It leaves cell service complaints clearly in the carriers’ hands
● It could raise, according to RBC Capital, Apple’s iPhone profit margin from 50% to 55%.
More details on the iPhone Upgrade Program can be found here. Munster thinks that eventually 75% of customers will move to an annual upgrade cycle resulting in a 10% increase in sales.
Read More