1. This Friday, I signed up for the iPhone
Upgrade Program, because of course
I did. A new iPhone every year? How
could I refuse?
It goes beyond that, though, and I'm
APPLE COREFORUMS
Hardware as a Service:
Thoughts on the iPhone
Upgrade Program
By silellak on September 28, 2015 11:59 pm
ADVERTISEMENT

2. starting to believe this could be the
start of a fundamental shift in how
people buy technology going forward.
Before we dive too deep into that,
though, a brief Q&A:
So what is the iPhone Upgrade
Program?
Well, to start with, it's not a lease, like
many people seem to think - it's 0%
financing, through Apple. Take the
price of an unlocked iPhone, add the
cost of AppleCare+, divide by 24, and
that's what the monthly payment is.
Like any financing plan, you can pay it
off at any time. When the next iPhone
comes out, you have the option of
selling your current iPhone back to
Apple and getting the latest model,
while your monthly payment remains
static.
Isn't this what AT&T and Verizon
and other US carriers already offer?
Yup! It varies a bit, depending on if
you get insurance through them,
whether or not you want AppleCare,
and how long the terms of the
contract are, but yeah, it's not
dissimilar to AT&T Next and Verizon
Edge and other such things.
So why go through Apple?
Because fuck the carriers.

3. Seriously? That's it?
Kind-of. The problem with any of the
US carrier plans is that you're tied to
that carrier, at least until you pay the
device off. Phones you get through
the iPhone Upgrade Program are
unlocked. You could jump from AT&T
to T-Mobile to Verizon to Sprint, all on
the same device.
So why is this a big deal? Haven't
other companies sold their phones
directly? Why do you think it's the
possible start of a paradigm shift?
Because it's Apple doing it, and - like
it or not - when Apple does things, it
tends to impact the industry in a big
way.
Apple saw the writing on the wall;
subsidized phones are dying, and
with it, any way to realistically claim
that their phones "start at $199". So,
millions of customers are now looking
at the unlocked, unsubsidized price,
and let's face it: no one wants to pay
$650 for a phone, much less the $750
you need for a phone with decent
storage or the $850 for a phone with
decent storage and a big screen.
Those aren't the type of numbers that
move 13 million phones over a single
weekend. But you know what sounds
way better than $650 all at once? $31
a month.

4. Why does that sound better? Well, I
can't speak for everyone, but
personally, I'm better at budgeting
around monthly payments than I am at
saving up for a large one-time
payment - even in cases when the
large one-time payment is cheaper.
One-time costs are scary; monthly
payments are smaller and friendly.
That's why I suspect that this isn't just
a shift in how people buy iPhones, but
potentially a shift in how people buy
all sorts of things.
You know what sounds expensive? A
$349 smartwatch. You know what
sounds better? Paying $16 a month
for that same smartwatch, which is the
price of the cheapest Apple Watch
plus AppleCare, divided by 24. You
know what sounds even better than
that? "Upgrade every year and enjoy
the latest iPhone and the latest Apple
Watch for just $45/month!"
Apple is positioned as perhaps the
only company that could do this - they
sell almost all of the pieces of the
hardware puzzle, so they could easily
'bundle' together pieces of Apple
hardware for a 'discounted' monthly
rate. I imagine there are millions of
people who would pay $80-100 a
month to ensure they have the latest
iPhone, Apple Watch, and iPad, or
$100-120 for the latest iPhone and
MacBook Pro.

5. This is why I call the iPhone Upgrade
Program - and my hypothetical Apple
Upgrade Program - "hardware as a
service". So many of the software
services we use every day are
updated and improved without our
knowledge; some we pay for with
money, others with our data. All of
them largely exist to do things we
could do on our own, but we pay for
the convenience. I could run my own
cloud storage system, but Dropbox is
far more convenient. I could use
Google Drive for free, but I might
prefer paying for Office 365.
"Software as a service" has always
been about trading money for
convenience, and "hardware as a
service" is no different. I could budget
better, save up a large payment, buy
a new unlocked every year phone,
and sell my old phone - but I don't,
because now there's an easier way. It
may not be the most cost efficient
method, but it's by-far the easiest.
The fact this is starting on an S-cycle
year really helps drive this point
home, as you're quite-literally paying
for a faster, better version of the
otherwise-same package. Think of it
as "subscribing" to the iPhone; you
pay the same price for the service,
and it gets better on a yearly basis.
Office 365 gets video support; the
iPhone gets a 12 megapixel camera.
Dropbox gets a team feature; the

6. iPhone gets another gig of RAM.
The only fundamental difference at
this point is that one is software and
one is hardware, which is one reason
why I believe Apple is so intent on
making the hardware upgrade
process as seamless as possible -
which is why I think AppleCare+ is
built-in as part of the deal - it's the
final piece of the "hardware as a
service" puzzle. Something go wrong?
Rather than pay another $650, you
just head over to the Apple Store, pay
a one-time fee, and you're back in
business, good as new.
It's insidious in its own way; the most
overt form of hardware lock-in
imaginable. Once you've bought into
the iPhone Upgrade Program - or a
hypothetical Apple Upgrade Program
in the future - why would you want
out? If you like the devices, and
you've already budgeted for the
monthly costs, you have little reason
to consider competing products
unless you have a terrible experience.
Lock-in aside, though, it may also truly
be a win/win for customers - I believe
it is, otherwise I wouldn't have
considered the iPhone Upgrade
Program at all. It gives people the
option to buy a truly unlocked device,
free from carrier interference, in a way
that many people can likely budget for
much more easily.

7. It's consumer-friendly enough that I
not only hope my Apple Upgrade
Program becomes reality, but that
other companies follow suit. Why not
pay Google $40 a month for a Nexus
phone and a high-end Chromebook
every year? Or Samsung $60 a month
for a yearly upgrade to your Galaxy
Note and Gear S smartwatch? Or
Microsoft $80 a month for a flagship
Windows Phone and a Surface tablet?
The best part is, if this catches on, it
should be fully scalable. If all you
need is a basic phone, you budget $5
or $10 a month and get the equivalent
of a Moto G every year. If you need a
new high-end laptop and and flagship
phone, then you budget $100 or 200 a
month. If you change phones and
tablets more frequently than laptops,
then you just budget for those, while
continuing to save up for a new laptop
when you actually need it. This may
be the only way smartwatches ever
truly catch-on; rather than being an
expensive accessory, they become a
relatively in-expensive "add-on" to
your hardware plan.
It's easy to see this not just becoming
a way we buy our hardware, but the
preferred way to buy hardware. I can't
speak for everyone, but I know I'd
prefer to set aside a lump monthly
payment to always have the latest
phone and watch - if it's a known,
constant cost, I can budget for it, and
never have to think about saving up

8. 3 comments
10 comments
5 comments
money for a new device in those
categories again. Most of the software
we use every day is getting faster and
better without us thinking about it; it's
about time the hardware we use follow
suit.
Anyone having trouble with Apple Music
since upgrading to new iPhones?
21 minutes ago by JeffWPa
El Capitan is overall a great upgrade
about 1 hour ago by LinuxDomi
Ad Blocking: New York Times
about 4 hours ago by ddjeff
Safari on El Capitan alone is worth
upgrading for
about 5 hours ago by Jun Hyeon Mun
Where to buy the iPhone 6S from?
about 15 hours ago by Aditya Marwah
THERE ARE 22 COMMENTS. READ THEM.SHOW SPEED READING TIPS AND SETTINGS↓
RECENTLY IN APPLE CORE