I brought up the iPhone Upgrade Program a couple of weeks ago, asking whether it is time for Apple to unveil a version for the Apple Watch. However, with the announcement of the new iPhone Edition/X imminent, it is time to focus on Apple’s true flagship, and its existing upgrade program. I think that this particular launch presents a unique opportunity for Apple to grow their iPhone Upgrade Program and foster an even closer relationship with their customer using the anticipation of this highly anticipated tenth anniversary version of the iPhone.
All Bundled Up
I’ve seen several reports surface today about potential services bundles that Apple could offer with the iPhone Edition to soften the blow of its higher price. The most common suggestions were a year of Apple Music and a higher tier of iCloud storage. This seems like a reasonable idea on the surface, but with the popularity of the Edition/X virtually assured and with Apple looking to increase their services revenue, it seems unlikely to me that they would go this far, at least without something to balance out the deal a bit more in their favor.
This is where using the iPhone Upgrade Program as the requisite to get free bundled Apple services makes some sense. Apple would lock the customer into a closer relationship and would have the opportunity to get a large number of these phone traded back in a year later as users upgrade. Apple can then, in turn, resell them on the Apple Outlet and overseas at a more reasonable price. Customers would get the free year of services, and would also get AppleCare+ with the Upgrade Program, which is a great thing for a phone that is covered in glass front and back. Then, the customers who like Apple Music and iCloud would presumably become paying customers after the free year. This would be a win-win deal for both Apple and their customers.
Time for Hardball?
If Apple really wants the Apple Upgrade Program to grow, they will have to step up and play some hardball with the carriers. I know this sounds like a classic case of biting the hand that feeds you, but Apple is one of the few companies that has the money and clout get away with such a move. There’s already no love loss here. Despite their glowing praise of the iPhone on the surface, the carriers typically push Android phones because they carry their apps and branding while Apple never has and never will. They may not like the iPhone, but they know that they need the iPhone. This is and always has been a forced partnership, so even if Apple starts to push the iPhone Upgrade Program more, the carriers know there isn’t anything they can do about it with the current balance of of power.
The carriers’ feelings aside, If Apple really wants to bring more people into the iPhone Upgrade Program, now is the time. If Apple prioritized their retail store reservations of the iPhone Edition/X in favor of the their in-house upgrade program, users would flock to the program to get a leg up on the competition. With demand for the Edition/X sure to outstrip supply for several months, this would be such an easy sell.
This move obviously wouldn’t sit well with cell carriers, but as I said before, there really isn’t anything they can do about it. This is especially true in the US where the iOS has near market share parity with Android. Whether their customers cut them out of the deal by going direct to Apple, or buy devices from them, all of the US carriers have somewhere between 30-60% of their users who want an iPhone. If they were to drop the iPhone in response to a more powerful iPhone Upgrade Program, some of their customers will drop them in return. That’s just how it is, and the carriers know it. They can’t walk away Apple, even if they want to, or if Apple takes a few steps away from them.
Just because Apple can do this doesn’t mean that they will. The iPhone Upgrade Program is approaching year three, and Apple has yet to aggressively push it. I wasn’t surprised when they started modestly in year one, but I honestly expected them to ramp up the hype last year. I was really surprised at how quiet Apple was and still is about it, and find myself wondering what the reasoning behind the program is. What is the point of having an in-house upgrade program, the very existence of which steps over a certain line with the carriers, if you aren’t going to grow it into something meaningful?
Maybe one day we will get the inside story of the Apple Upgrade Program from someone like John Gruber or Rene Ritchie. Until then, I would love to see Apple stop playing around and get serious about in-house upgrades. If they use the iPhone Edition/X release in the right way, the iPhone Upgrade Program could see its ranks swell, and Apple could take a big step toward independence from the carriers in terms of selling hardware to their customers.
Has anyone else out there bought an iPhone using Apple’s iPhone Upgrade Program? I’ve had a positive experience, but I would love to hear how others have faired. I am also curious to know if anyone who hasn’t considered it before would if it would either help you get your hands on an iPhone Edition/X earlier, or get a free services bundle with it? Let me know in the Comments section below, on Flipboard, on our Facebook page, or on Twitter @iPadInsightBlog.