updated 12:43 am EDT, Tue July 29, 2014
Program expected to be operational in time for next iPhone arrival
Traditionally, iPhones bought from Apple Stores come in two varieties: locked to an individual carrier with a two-year contract, or completely unlocked but at full retail price. Last month, the company began allowing sales of iPhones on pre-paid plans, and now appears to be poised to allow Apple Store sales of iPhones to existing (and eligible) AT&T Next, Verizon Edge, T-Mobile Jump, and possibly Sprint EasyPay customers, who have the freedom to upgrade their phones more often in exchange for a slightly higher monthly charge.
Each of the programs works differently, but allows customers to upgrade their smartphones more often, with the cost of the phone included as a monthly charge alongside whatever phone and/or data plan the customer chooses (what used to be called an "installment plan"). The most liberal of the programs is probably Verizon's Edge program, which allows users to change phones as quickly as 30 days into the agreement -- but with the catch that the original phone must be 60 percent paid off (or equivalent trade-in value) before a trade is allowed.
T-Mobile's Jump program appears to require users to wait six months, but stipulates that the original phone must only be half paid off before switching (and also offers tablet financing under the same scheme). Sprint's program is similar to the Verizon program, but charges a one-time $36 upgrade fee. AT&T offers a financing agreement that allows for upgrades in as little as 12 months with no fees, but the original phone's cost must be paid off.
All of the programs are aimed at encouraging switchers between platforms (which is seen to be to Apple's benefit) and more frequent upgrades rather than waiting out or paying fees to terminate early a two-year agreement. In this way, consumers pay more overall for the smartphones but have greater flexibility to get out of an agreement with a phone they've decided they don't like, or jump ship to a newer model, which promotes impulse buying.
According to a report from 9to5Mac, training on the new initiative will take place from August 10-28 in US stores, alongside some minor changes to the Genius Bar customer-service handling procedures. The program is clearly timed to coincide with the expected September launch of the next iPhone, and appears to be part of Apple CEO Tim Cook's stated intention to increase iPhone sales coming out of Apple Stores.
If the company intends to offer four possible sales options on iPhones: contract-free, traditional contract, prepaid and now the "upgradeable contract" option, Apple Stores could be positioning themselves as able to compete more effectively against other multi-carrier retailers such as electronics and multi-carrier cellular stores. A recent study also projected that up to 35 percent of existing Android customers could be tempted to switch to the iOS platform if Apple comes through on rumors suggesting one or more "large-screen" iPhone sizes -- with parts leaks and rumors suggesting both a 4.7-inch model and possibly a 5.5-inch one as well. Allowing for a wider array of payment options may also appeal to Android's traditionally cost-sensitive base.