During the promotional event last week in San Francisco, at which Apple introduced the iPhone 6s, the tech giant also announced the iPhone Upgrade programs, which will allow customers to purchase the iPhone on an installment plan similar to those three of the four major U.S. mobile operators have been offering. With no down payment, buyers will be charged a monthly fee for their iPhone 6s or iPhone 6s Plus, with the option of getting a new device after one year. For the iPhone 6s, the price structure is US $32.41 per month for the 16 GB version, US $36.58 for the 64 GB and US $40.75 per month for the 128 GB. For the iPhone 6s Plus, the pricing is US $36.58 for the 16 GB, US $40.75 for the 64 GB and US $44.91 for the 128 GB.

Tarifica’s Take

Apple’s new pricing strategy is not good news for U.S. mobile operators. The iPhone Upgrade program allows customers the same cost control and device replacement options as AT&T, T-Mobile and Sprint (Verizon does not offer installment pricing for the iPhone), at prices that are comparable or in some instances better, and with the ability to change carriers at will. For example, 12 payments for a 64 GB iPhone 6s total US 438.96, versus US $450.00 under AT&T’s Next program. In addition, Apple’s offer includes the AppleCare protection plan at no extra charge, whereas AT&T adds US $129.00 for AppleCare. T-Mobile and Sprint’s offers cost less than Apple’s, but they are being offered on a short-term promotional basis only and also require a down payment (as does AT&T). In short, Apple is in a good position to take device revenue away from the operators for this popular high-end phone, and the fact that the phones are unlocked is likely to increase churn, not to mention making the device manufacturer’s brand more prominent in the customer’s mind than that of the operator.