Apple is set to start financing iPhone sales a move that could force carriers such as Telstra, Optus and Vodafone to be a provider of SIM cards only and not the latest iPhone.
Currently the plan is to launch the program and if successful roll the program into markets such as Australia according to Apple sources.
The program gives US users the option to upgrade to a new phone once a year for monthly payments starting at US$32.
Apple’s leap into phone financing gives US consumers another option to buy the latest iPhone at a low monthly cost.
Analysts estimate the Program could yield a sales boost of 5 million to 7 million more iPhones a year.
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The move could free up tens of millions in cash flow for carriers while also forcing carriers to match Apple pricing.
Apple’s plan, which would allow customers to upgrade as frequently as once a year, could further fray the somewhat tenuous ties that bind subscribers to their carriers said the Wall Street Journal.
Currently most carriers in Australia demand a two year contract with hefty margins built into a combined SIM and iPhone sale.
With Apple financing phones, there will no longer be anything financially tying subscribers with the new plans to their carriers. All an iPhone user would have to do to switch carriers is get a new SIM card.
All of a sudden carriers would have to expand the marketing of their networks Vs flogging a combined sim/iPhone deal.
That could push them to respond by lowering the cost of device or service plans, effectively bringing subsidies back, New Street Research notes. This, in turn, could pressure operating margins already dinged by price wars.
And while Apple must be careful about antagonizing its biggest distributors, the move may presage more aggressive steps down the road, according to UBS.
These could include a shift to a software-based SIM, which would allow customers to switch carriers without having to open up their phones. Apple could also launch its own branded wireless network similar to Google’s Project Fi.
The Wall Street Journal concluded that when it comes to financing phones, Apple may be giving carriers a bit more help than they bargained for.
