Why Apple's iPhone Upgrade Program Is a Bad Deal For Most 279
Mark Wilson writes: You may have heard that Apple had a little get together today. There were lots of big launches — the iPhone 6S, the iPhone 6S Plus, and the iPad Pro. Those waiting for an iPhone fix were given quite a lot of get excited about, but like your friendly local drug dealer, Apple has a 'sweetener' to help ensure its customers just keep on coming back for more: the iPhone Upgrade Program which lets you upgrade to a new iPhone every year as long as you keep paying each month. On the face of it, it might seem like a good deal — particularly as the price includes Apple Care — but is that really the case? What Apple's actually doing is feeding the habit of iPhone junkies, keeping their addiction going a little bit longer, and a little bit longer, and a little bit longer. In reality, Apple would like you to perma-rent your iPhone and keep paying through the nose for it. Ideally forever.
Get used to it, this is the future (Score:5, Insightful)
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That's a form of planning and most people are bad at that.
To be fair, it *is* on my to-do list.
Re:Get used to it, this is the future (Score:4, Insightful)
You can preach this stuff about living within your means to people all you want, but they're not going to listen, especially people at the bottom who, as you put it, can't afford to participate in our shared culture. We've seen it over and over again, where someone from a poor background hits it rich (usually through sports or music fame), lives high on the hog for a while, and then goes bankrupt after their fame disappears.
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That seems foreign to me. I've always been putting a third of my income into savings every month, no matter what my income level, and my income has ranged from very low (12,000 a year) to what some call middle class (roughly 48,000.) Sure I always feel like I'm in a money pinch, but I'm so used to this being my standard of living that it doesn't bother me.
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People's lack of impulse control, and future time orientation allows others to become rich, from stockholders, to stock buyers.
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What if not participating in our shared culture prevents you from improving your financial situation? What if that "shared culture" was specifically designed to increase inequality?
We're creating a digital divide that's more effective than a fence at the border when it comes to keeping out the "undesirables".
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As a society, we have a real inequality issue and I'm sympathetic to those who can't afford to participate in our shared culture
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Dunno... back when I was young and poor, I paid $10/mo for a cheap dialup ISP account (with 200 whopping hours a month access time), and literally *built* my rigs from spare parts and carcasses at the local computer shops (to give you an idea, my very first VGA monitor needed a new capacitor and I still paid $75 for it). Sometimes I'd straight-up barter parts if I stumbled across something useful. While world+dog was using the brand-new Pentiums and 56k modems running a shiny new copy of Windows 95, I was d
Re:Get used to it, this is the future (Score:4, Insightful)
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I'm sure somebody will respond that having the latest phone is an entitlement and the government should be distributing them to everybody.
You're sure are you? I'm fairly sure that no-one will respond with that, as it's just a convenient straw man, but I guess we'll see.
Re:Get used to it, this is the future (Score:5, Funny)
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I imagine there's re-re-insurance as well. And re-re-re-insurance. But who re-re-re-re-insures th re-re-re-insurers? That's the burning question that I want an answer to, anyway.
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Yes. It's called re-insurance.
But who re-re-re-re-insures th re-re-re-insurers? That's the burning question that I want an answer to, anyway.
You do. It's always that way,
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That's called "income" and for most people, it's shrinking.
Re:Get used to it, this is the future (Score:5, Insightful)
I can't imagine why this has suddenly become a thing. Outside of Netflix, which I understand, since movies are a way different beast than software and music.
If there's one damn thing right my parents taught me, it's about owning my own shit. Get things paid off as quickly as possible so that it's yours, and you don't end up dependent on anyone or anything for the thing you've paid for, especially if it's something you need on a moment's notice.
I've had to explain to more than one person that "the cloud" is a cute as hell idea, until "the cloud" is down for a few hours, or gets hacked.
Re:Get used to it, this is the future (Score:5, Insightful)
I can't imagine why this has suddenly become a thing.
It isn't sudden. Gyms have been on this train for years. New car salesman want you to "buy" a new car every three years. Make the monthly payment part of life, and people forget it is there -- it becomes the baseline. And it allows them to make more accurate revenue projections.
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fsociety will fix that
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In fairness to gyms, it isn't like there are no maintenance costs.
Even if there isn't towel service, someone still needs to mop up all the sweat and dirty floors. And machines go down and need repair. And some of the smaller freeweights tend to wander off. And resistance bands get damaged and broken.
Am I saying that there are no maintenance costs with other services? Of course not. But to say a gym has no need for a consistent inflow of revenue is to tell me you've never actually been to one.
(I will le
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This is especially true since there are so many cheaper ways to get exercise. My local arena charges $2.50 to go skating. You can take a walk or go for a run basically for free, you just need a pair of shoes. Cycling can cost a bit more to get started, but you can get a working bike for not too much money off Craigslist, and it costs nothing for you to ride it.
You can get some decent exercise for just a fraction of what a gym membership costs. If you want to lift, pick up some cheap dumbbells from walmart
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Or, you know...
https://youtu.be/RD_44xEEDjU [youtu.be]
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No, gyms are not a scam. *Some* gyms are definitely a scam (LA Fitness, I'm looking at you), but that's because they've adopted a scammy business model, not because they're a gym. There's plenty of gyms which are not scams; YMCA is a good example of one.
Unfortunately, yes, a lot of gyms (mainly the corporate ones) do profit a lot off people who sign up thinking they're going to use the service, and then rarely bother to go in. However, for people who actually use them, gyms are useful because most people
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Additionally, there's a social aspect that's associated with going to a gym.
I find I put more effort into it when I'm around other people. Not because I'm particularly competitive, but because I'm there and I'm capable.
Also, classes help me put a structure to my workout routine. I admit I have a problem with severe lack of discipline if left to my own devices, but if someone has a workout ready for me, boom, I'll do it.
And, frankly, I need to leave the house and talk to other people, because even though I
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How is LA Fitness a scam? It's pretty much a small sign-up fee and then month to month.
The gyms you're thinking of are those that where a lifetime membership is purchased for sometimes thousands of dollars. Those gyms use high pressure sales tactics and there is a stiff penalty to cancel the membership.
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And of course the lender makes a small profit, but you're happy to trade a little extra money for the convenience of having it sooner.
These days you can get some loans that are very close to 0%, or even actually 0%, on cars. Between the low prime rate and the soft market, I'm guessing carmakers are doing everything they can to get people to buy new cars. By contrast, buying a used car means getting a loan for much more than 0%, so you'll get socked with a lot more interest when you buy used (which of cour
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Buying something on credit has been around for several decades.
Well there's a real eye opener to a lack of historical knowledge.
Re:Get used to it, this is the future (Score:5, Interesting)
Personally I'm OK with paying for a music subscription. There's so much music out there, that I couldn't hope to own even a tiny fraction of the good stuff if I was buying everything by the album. Music services cost about $10 a month. For that I'd be lucky if I could buy a single album every month. After 10 years of buying 1 album a month, I would still only have 120 albums. That's a pretty small selection of music as far as I'm concerned. Esepcially when you consider that you wouldn't always select the best option 100% of the time. After 10 years, probably only 80% (96) of the albums would be worth listening to. And that's being generous as far as how good I am at picking up albums. Then there's the problem of multiple good albums coming out in the same month. Do you buy 3 albums one month, and spend a lot of money, leaving you with no new albums for the next 2 months? Or you could just pay $10 and have access to just about everything.
Right now, my only complaint is that they don't have absolutely everything. I think there would be a decent market for a service that cost $20 and had absolutely everything, but the music labels won't let that happen. It would probably even be a good deal at $30. Same goes for Netflix. I would probably pay many more times the current rate if they had everything. $40 or $50. Most people were/are paying more than that for cable already, and they still weren't getting everything.
I think that all media bought on subscription is a pretty good deal, provided it makes it cheaper to access more. Personally I don't ever tend to read a book more than once, because it takes so much more time than any other kind of media, and there's just so much good content out there. I really don't see any value in owning a book.
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I'd definitely agree that a monthly entertainment expense would be popular if a similar model was used across content providers. If Amazon has content that Netflix doesn't, it would be nice to not have to pay two subscriptions to switch between them.
Likewise, if both have the same content but one has a better content delivery, the one that serves the customers best should get paid
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The problem with your analysis is that there *aren't* any good albums coming out every month. All the good music came out in the 60s through 80s; everything coming out now is corporate-produced, Autotuned shit, except perhaps for a handful of bands which started back in the 70s or 80s and somehow are still alive and kicking and touring and making music.
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The 60s-80s reference should make it pretty obvious I'm a fan of classic rock, and also metal (but not really extreme metal; think Iron Maiden, not whatever the latest Norwegian growling death band is), so obviously I'm not interested in anything playing on the radio these days (aside from the classic-rock stations where I can hear the same 5 Pink Floyd songs over and over and over), so we're talking about indie stuff here. I'm sure there's decent stuff out there somewhere, but good luck finding it. Recor
Re:Get used to it, this is the future (Score:4, Insightful)
It hasn't suddenly become a thing. People have been leasing cars forever. This is the same thing. I know people who get a new car every two years. They like having new cars, and lease programs are designed for them. There are some people who want the latest shiny at all times. If you're one of them, this phone lease program will make it a bit cheaper for you to do that. If you don't replace your phone every year then this isn't for you.
The insidious thing is the cell provider model of obscuring the fact that you're leasing a phone by bundling it with the connectivity itself. Kind of like if the only price a car dealer would ever advertise was the downpayment, and your actual lease payment was bundled with the cost of gas.
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If there's one damn thing right my parents taught me, it's about owning my own shit.
My family taught me that owning a house is a total and major drag.
My father was forced to relocate on his job to a different office, about a three hour drive away from home. The job market was not good at the time and he was an older man, it was not possible for him to resign and take another position. He had recently purchased a new home and there was no possibility of selling it and moving in the required time frame. His only choice was to get a studio apartment in the new town and live there on the we
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Although I dislike the "rent everything" future as much as you, it makes sense, even if you don't assume that these companies are blood sucking greedy vampires. The basic problem is that economies of scale are tremendously high for most modern goods. Once you create the master track (at great expense), distributing music to millions has never been cheaper. Once you invent the iPhone 23 (at great expense), slave labor in the far East builds them for $100 each. This is different from even highly capital inten
Re:Get used to it, this is the future (Score:5, Insightful)
So you're actually *complaining* that the carriers finally separated out the cost of the phone from the cost of their service?
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You are forgetting about the cost of leasing/renting. Yes, if you can either pay 500 dollars now or pay 50 dollars a month for 10 months, you are better off with the latter. But that is almost never the case. It is more likely to be 50 dollars a month for a year (600 dollars total). You pay more to pay later.
Of course, in some cases, as with American cell phone contract (at least until recently,) the two options are rigged so that the monthly plan is equally cheap or even cheaper. This is usually done by co
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Most things that you buy are very non-liquid (hard to sell) and depreciate quickly to zero. If you go out and spend $500 on a phone, you *feel* like you didn't really spend that much money.
Phones, at least good ones, do not depreciate to zero quickly. Now, you're probably not going to get 90% of the retail value when you resell one, but they do hold their value to an extent, much like cars. Go try to buy a Samsung Galaxy S5 (which is supposedly "obsolete" because of the S6): the prices are about $350 rig
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Sounds good to me. After all, people seem to actually like this "ownership" model, and even though it's great for corporate profits, consumers seemingly agree that it's a great deal and are lining up to sign their names on the dotted line.
PT Barnum would be proud.
Paging Captain Obvious (Score:2)
You are needed in here, stat!
Apple pretty much had to (Score:5, Informative)
With Apple's leasing you the phone plan, it completely makes this irrelevant. Not many people want to shell out $700 for a new phone, but $30 a month they don't have to realize they are paying $200 in interest. It is silly human psychology.
They had to do it to keep things going.
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> they don't have to realize they are paying $200 in interest
Opportunity cost on that is what, $150? Seems like a perfectly reasonable decision to me, at least financially.
My problem is the vendor lock-in, which is amusing considering its an unlocked phone. That part I need to read more carefully.
Re:Apple pretty much had to (Score:5, Informative)
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Re: Apple pretty much had to (Score:2, Insightful)
Only if you trade it in each year. Keep it for two years and you own the phone.
Zero opportunity cost...
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Dumbest article ever (Score:4, Insightful)
Let's see, Apple does *exactly* what everyone else is already doing, for a slightly lower cost, with clearly defined terms and nothing hidden in the price, and slightly improved conditions (AC+).
Apple is evil. ::rolleyes::
Re: Dumbest article ever (Score:2)
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With a difference.
Carrier based plans will lease out the phone until the payments are complete. Apple on the other hand is a subscription service.
What's this mean in practice? Well you only come out ahead, and it's only cheaper if you were one of those psycho iAddicts who absolutely had to have a new phone every year. Most people don't break out of a contract to upgrade to the latest phone but instead hold it for the 24 months.
Personally I don't see the conditions and price all that favorable for most peopl
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Depends on lots of factors (Score:5, Interesting)
I sell my phone every 18 months. Technology is moving fast.
It's closer to break even (with AppleCare) than you might suspect; the variance will be on the policies around damage, wear, replacement, etc.
Also consider the out of pocket on taxes - my 128GB phone cost me around $1000 out the door here in Canada. (15%)
I think it's ~$20/mo depreciation over a 2 year period vs. $34/mo they're taking, but my time is worth something, and if they make it headache free - it's not as crazy as it might seem at first when you run the numbers. I'm already paying $120/mo all in for service - yay Canada.
Over 4 years? The depreciation is very high - it's stupid to keep the phone this long if you want a new one.
If things get so grim $14/mo is a problem, no, this service isn't for you - but it's not as crazy as you might first think. I'll probably take them up if the price differential isn't too crazy here over the US.
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Apple is way too locked-down and restricted. They last as long as Apple lets them last.
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It's the Hatorade Distortion Effect.
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One word: Camera.
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There is no cheaper service. There is one carrier where I live with a network that has LTE.
Canada has the highest fees in the world for mobile.
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Life's short. I like gadgets.
Otoh, I keep cars for 15 years. I can buy a lot of iphones with the cash that saves.. to each their own.
For the Hardcore Apple Fanboys. (Score:2)
What it com
Article tells us headline is wrong. (Score:3, Interesting)
For someone who knows that -- without a doubt -- they will upgrade to whatever new iPhone comes out in a year's time, and they're confident that they'd definitely take out Apple Care, it amounts to a saving of a few dollars over two years.
This is just another pointless article by a hater, he doesn't even agree with himself. It's bait, and not even good bait, he throws a few numbers out there but doesn't show us any actual cost comparison between using the upgrade program Apple offers and, say, paying full retail or taking advantage of other upgrade programs offered by the service providers. Indeed, he even states that you can save money using the program while complaining that you're just sending more to Apple. There's no substance to the article, no facts to back up all of his complaining about the bad upgrade deal. He's probably just sour he's already in a contract and can't dump his outdated phone to take advantage of the new program. This article is just one of the many new additions to the pointless Apple hate on the internet we'll be seeing now that they've announced another upgrade to their mobile product line.
Just a quick disclaimer, since a bunch of you will no doubt label me a fanboy, I use Apple AND Android products, they both have different advantages and disadvantages. I find myself defending Apple products most often though because for some reason there's this strange hate towards them from people who don't use them, as if we should all be that worried about what phone other people are using...
headline isn't wrong (Score:3)
It's a good deal if:
1) you upgrade every year
2) you take out Apple Care
For everyone else it's not a good deal.
This article is ridiculous (Score:4, Interesting)
Phones are different than computers, yet people still try to apply the computer mentality to it. You don't just buy a smartphone and sit back and use it until it breaks. Unlike Windows XP, your smartphone OS has a very limited window in which it will receive security and other software updates. For iPhones, it seems to be a few years. For Android, it is worse and generally always less than two years. For some of the discount Android phones on discount carriers, the phone may have been abandoned before you even made the purchase!
In what world do you buy a smartphone and use it for the rest of your life? An upgrade plan that includes Apple Care "bad for most"? Hint to the author: You can't extrapolate your personal opinion to apply to the rest of the world.
It's slowing down (Score:3)
By now I believe even non technical people are realizing the phones are computers. Some PC computers became very tabletish (the ultrathin with rotating stand and keyboard, the outright tablets) and the phones computer-like, even the old and bad ones : it gets common to use external speakers on them, and perhaps known by some people that you can use an external monitor (usually TV).
But what I want to point out is they're becoming somewhat mature, and the specs are plateauing (display res maxed out, need to w
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I buy a phone in order to be able to reach people when I need, be it by voice, sms, mail, whatever. I might use it for web browsing when I really need some info in a hurry and I don't have my tablet/laptop with me. For anything else a phone is just inconvenient.
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I use mine until its broken or needs a new battery.
I'm also super frugal and live a lifestyle that most people would prefer not to in order to gain capital for business ventures.
I don't "need" flashy and shiny new things all the time nor do I use apps on my smartphones other than included ones.
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You're ignoring the trends. A couple of Apple devices I have from 2011 are still going strong and are supposed to be supported through the next major OS update. Android devices go out of support lifetimes like every year.
It's almost like Apple thinks they can make people want to update, and Google thinks they need to force someone to with an insecure device.
6S (Score:3, Interesting)
Nothing spells "success" like 6S. Others might say that spells "sucks ass", but to each their own.
If this catches on (Score:5, Funny)
If this catches on, I bet the car companies will be doing it soon. Imagine a scheme in which you pay a monthly fee for the use of a car, though you never actually own the car. If they put their minds to it, I bet the car folks could even get people to pay some sort of large, up-front fee for the car they'll never own. (Sweet!) And as an inducement, the deal might include all maintenance, for free. Not only would you save a lot of money that way, you'd never have to worry about replacing the battery. Best part: you never have to buy a car again!
Apple's deal is great ... for Apple, of course! (Score:2)
People are surprised that the most valuable company in the world got there by not being a charity? They are JUST now figuring this out?
Despite all the marketing, at its core, Apple is a profit-maximizing, shareholder-serving corporation that makes money by selling hardware and services. They are quite good at it, as well, with cash on hand that's larger than the GDP of some countries. They got here by figuring out ways to have people give them money.
And here's another little secret: any company with a signi
Is it really that bad? (Score:5, Insightful)
OK, so $27.45 * 24 months is $658.80, that's $109.80 more expensive than the unlocked iPhone by itself. AppleCare+ is included, that's $99, so that brings the leasing premium down to $10.80 over the course of two years in Apple's pocket for financing the hardware. And then, halfway through the 24-month financing period, you get an upgrade to the latest device. Sounds legit to me, and a much better deal than carriers are offering.
If you purchased outright each year, you'd spend $648 the first year, $648 the second year, but get back approx. $300 for selling your previous-gen iPhone, bringing the total hardware cost over 2 years to $996.
This program also puts a whole lot more power into the hands of the consumer, as they are unlocked and can be used on any network. If more and more people are using unlocked phones, we might actually see some real competition in the wireless industry when it comes to things like customer service.
I dislike IOS devices - (Score:2)
Let's get that out there.
I think the drive to replace your phone at least once a year is shallow and an example of what's wrong with people in general.
That being said, if they develop a program to support the minority of people who must have the latest Hipster Phone when it comes out, by all means let it thrive. I'm not going to sign on, I see the problems with the program the built in expense, the money drain, etc... I would be tempted by a similar program, if one existed, for the latest HTC hardware wi
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Let's get that out there.
I think the drive to replace your phone at least once a year is shallow and an example of what's wrong with people in general.
That's what YOU think.
I think there are a lot of corporations and working people out there who feel that the current generation of phones is holding them back. They don't have enough storage capacity, they are too slow, they don't have the required features for their work.
But now a new phone comes along, it's quicker and does more. Remember these are working people who are making lots of money. Their phone is just a tool for them to use in their money-making tasks. The price of the phone is really quit
It depends. (Score:4, Insightful)
I have a mostly iOS household, but we do not upgrade every cycle. In fact, we usually skip two or three upgrades per device. And for the most part, I prefer to do so. The upgrade plan offers me nothing. Now, my friends who insist on upgrading every chance they get, this may be a better value proposition for them.
they need to spin it better (Score:2)
....just make sure the marketing message suggests that only the hippest, coolest, trendiest people join that program, and the Apple-ddicts will line up to sign up.
I would laugh at this but... (Score:4, Insightful)
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I honestly wonder (Score:2)
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After so many comments, and people have not realised this is not about consumer loyalty or helping or deceiving the customer...this is about killing a very active 2nd hand market.
Bullshit. This will affect, what, 10, 20, 30% of the iPhone sales? It's never going to be the dominant way to get an iPhone. The advantages really fit only a fairly small demographic - people with disposable income AND some deep seated desire to have the latest iPhone. While one could argue that the money would be better spent on psychotherapy or Cialis, people do what they will.
But there will be lots of extra iPhones for the refurb market. And if there isn't? Again, who the hell cares? There will be
How is this a bad deal.... (Score:2)
...if you are the type who gets the new iPhone every year regardless?
This program is not for everybody, although it will likely suck in more people on the yearly phone upg train.
So What? (Score:2)
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You wanna medal or something?
Depreciation for independent contractors (Score:5, Interesting)
I know independent contractors in Canada who'd rather rent their car and computer because the cost is 100% deductible on the first year. Buying thing means dealing with depreciation and getting your tax break later.
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Recurring revenue (Score:2)
First of all, they hope that there are lots of "features" on your phone that you pay for and
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Another first rule of business is "don't sweat the small stuff". If you lease a phone then have so much less to worry about. You don't have to worry about repairs or loss or an obsolete old phone. When you are making lots of money there is really no time to screw around with these things. Why do you think that companies lease cars and trucks? It's because they don't want to deal with upkeep and maintenance. They can write a fixed check every month for a fixed service and they can rely on it.
If the phone is so bad... (Score:2)
that you have to replace it after 12 months, maybe it wasn't a good phone to begin with. Such crap must sell for less than $100, isn't it? Oh wait...
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does this apply to car leases as well?
Actual math (Score:2)
Here is the normal total cost of ownership calculation for comparison.:
ONE YEAR UPGRADE CYCLE:
iPhone 6 64GB in 2014: $750
Decent eBay price in 2015 : -$450 (plus shipping)
Minus eBay fees: -$54
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TCO: $246 or $21/mo
TWO YEAR UPGRADE CYCLE:
iPhone 5s 32GB in 2013: $750
Decent eBay price in 2015: -$275 (plus shipping)
Minus eBay fees: -$33
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TCO: $442 or $18/mo
What if it's secretly about Android? (Score:2)
I read an article about this in Thursday's WSJ. The article said that it's about shifting control of the customer from the carrier to Apple. I'm sure that's true but I wonder if goes a little deeper. What if part of the goal is to prevent the carriers, who don't work for Apple, from convincing a customer to go with Android. Maybe the carriers are getting more profit margin by pushing a non-Apple product. If you set the way-back clock to the mid 90s, Apple was really struggling to sell their products in
Suck them dry (Score:2)
Suck them dry, they like it. And Apple needs money more than they do.
Re: Who cares (Score:5, Funny)
So, all of Slashdot, then!
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There was no mention of Samsung Galaxy in the article.
/duck
/run
Re:Lame doom and gloom article (Score:4, Interesting)
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Yep.
You NEED paid TV in some form.
You NEED a new smartphone.
You NEED a smartphone plan.
You NEED to go to a private 4 year college.
You NEED a new car.
You NEED to eat out.
Or substitute NEED with DESERVE.
Err.. those are want's not needs.
If you can live frugally you can save for the future, be happy, and enjoy a secure lifestyle.
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Why?