Sales of Apple's (NASDAQ: AAPL) new iPhone 6s and 6s Plus kicked off today around the world as U.S. carriers sought to one-up each other with new offers and promotions designed to get customers to upgrade to the latest smartphones or switch carriers.
Verizon Wireless (NYSE: VZ) said that starting today customers will be eligible to get a new iPhone every year if they purchase the iPhone 6s or 6s Plus through Verizon's "Device Payment" equipment installment plan, which requires monthly device payments that start at $27.08 per month for the 16 GB iPhone 6s. The new program allows customers to turn in their old phone and upgrade to a new iPhone every year. If customers pre-ordered an iPhone 6s or iPhone 6s Plus, they are automatically enrolled in the program if they elected the Device Payment option. Normally, Verizon customers on the carrier's EIP program must pay off the full cost of the device before they can upgrade. Verizon also points out that under leasing programs customers do not own their devices and must turn them in once the lease is up.
AT&T Mobility's (NYSE: T) Next 12 EIP program lets customers pay off the cost of their phones over 18 monthly payments, which means the monthly payments are higher than if they were spread out over a longer period of time, but customers can trade in and upgrade after 12 payments. AT&T charges $32.50 per month in device payments for a 16 GB iPhone 6s.
AT&T said for a limited time customers can get a 16 GB iPad mini 2 for $50 on a two-year contract when they buy the iPhone 6S or iPhone 6S Plus on AT&T Next and add service for both iPad and iPhone with a Mobile Share Value plan.
Meanwhile, Sprint (NYSE: S) CEO Marcelo Claure said the carrier will have enough iPhones on hand to avoid the long wait times that usually come when Apple launches new iPhones due to a crush of early demand.
"We feel we have adequate supply to fulfill the demands of our customers," Claure told Re/code in an interview. Claure said that Sprint is getting better response from device makers now that it is once again gaining customers. "No one wanted to partner when Sprint was losing 700,000 customers a quarter," he said.
"This is going to be the most successful launch from an inventory perspective," Claure told CNET.
Sprint yesterday sought to best T-Mobile US (NYSE:TMUS) with its own trade-in program for Apple's newest iPhones and is offering a 16 GB iPhone 6s for $1 per month in leasing payments and a 16 GB iPhone 6s Plus for $5 per month with the trade-in of an iPhone 6 or 6 Plus. The Sprint offer, which will be available for a limited time, comes a day after T-Mobile said it would offer the 16 GB iPhone 6s for $5 a month and the 16 GB iPhone 6s Plus for $9 per month in device payments when customers trade in their iPhone 6 or iPhone 6 Plus.
Sprint, and likely T-Mobile, are banking on getting in high-value phones that customers trade in under the programs. "If we get the customer's iPhone 6 in the trade-in, it has a $400 value when we resell it," Claure told Bloomberg. "It will be an accretive promotion for Sprint."
Through Dec. 31, customers on any other carrier who switch to Sprint or existing Sprint customers who are upgrade-eligible and turn in any other smartphone will get a promotional rate of $15 per month on a 16 GB iPhone 6s or $19 per month on a 16 GB iPhone 6s Plus. Customers who choose not to trade in an existing smartphone when they buy a new iPhone can get a 16 GB iPhone 6s for $22 per month and a 16 GB iPhone 6s Plus for $26 per month at Sprint.
Importantly, in order to get the T-Mobile discount from the trade-ins, customers need to own their existing device. Without a trade-in, the lease payment is $20 per month for the 16 GB iPhone 6s and $24 for a 16 GB iPhone 6s Plus.
T-Mobile said if customers have a remaining contract with their old carrier and own their device, they are eligible to have the early termination fee reimbursed through its standard process and take advantage of the offer. However, T-Mobile will not pay off remaining EIP payments as part of its iPhone offer.
Additionally, T-Mobile said that if customers hang on to their iPhone after their 18 month Jump! On Demand agreement is up, they can get a 16 GB iPhone 6s for $524, or $125 less than the full retail price.
Wells Fargo analyst Jennifer Fritszhe said in a research note that while the Sprint and T-Mobile offers "may seem like both carriers are incurring large subsidies, the trade-in value of an iPhone 6 or 6 Plus, which is still quite high, should partially offset the lower monthly price. For a 1-year old iPhone 6, the trade-in value is likely $300+."
She said perhaps the main drivers of these offerings are the improvements the new iPhones have for Sprint and T-Mobile's networks, and that both carriers want to get customers on the new phones to take advantage of those benefits, which could improve the customer experience and lead to lower churn. The iPhones support T-Mobile's Band 12 700 MHz A Block spectrum, which provides stronger coverage, and also support Sprint's 2.5 GHz two-carrier carrier aggregation, which boosts speeds. "For both TMUS and Sprint customers, the new iPhone should see noticeable improvements in network experience, which we believe is the impetus behind these recent moves," she said.
Overall, Apple is expected to see a jump in sales. "Sales of the iPhone 6S should do better than past iPhone initial sales because of wider country availability early, especially China," according to research firm IHS, which forecasts Apple will ship 236 million iPhones this year, a 22 percent improvement from 2014.
"The biggest innovations that Apple has done have typically been on the S series. On the surface the product looks the same, but under the bonnet it's totally different," IHS said. "The key differentiator this year is the 3D Touch, which is strongly differentiated from every other smartphone maker's phones. 3D Touch will power new apps, which will be exclusive to the iPhone because Android smartphones lack the hardware support needed for a pressure sensitive screen."
Looking ahead, IHS said that "next year is the big one for Apple. In 2016, Apple will have to sustain iPhone 6S sales throughout the year in a mature smartphone market and it must find a way to redesign the iPhone look radically, to continue to drive upgrades. This will be a greater challenge than achieving success in 2015 where Apple has benefitted from the straightforward switch to offering larger screen iPhones."
- see this Verizon post
- see this Reuters article
- see this Re/code article
- see this CNET article
- see this Bloomberg article
Sprint undercuts T-Mobile, offers iPhone 6s for $1/month in leasing payments with an iPhone trade-in
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