The United States remains one of the biggest markets for smartphone manufacturers. As more competitors come into the fold without fast turnaround from users, it has been a challenge for Apple to earn more profits and maintain market position. While the company may prefer users to change their devices more frequently, it has not been an easy task. Smartphones in the United States follow a two-year upgrade cycle giving the company $300 earnings.
According to a report by Value Walk, Apple has a lot more to do if it wants to take home more than $300 per user. Currently, subsidies maintain and drive sales of iPhone devices. Lately, there have been reports saying that US carrier may stop iPhone subsidies. Companies will focus more on wireless business for more convenient customer upgrades. This can result to higher iPhone sales and better opportunities for Apple.
Higher upgrade conversions mean high revenue for Apple. AT&T Inc and Verizon Communications Inc are going to introduce new programs to go up against T-Mobile JUMP program. The programs go by AT&T Next and Verizon Edge. Under the offer, consumers can settle the full amount of their handsets instead of an upfront fee and regular billing.
The programs can change the upgrade cycle from 24 months to just 12/18 months. People can upgrade their phones quicker than usual. Apple can sell more phones under this new setup. An analyst under BMO Capital Markets said that the strategy should transform the overall net upgrade cycle in 2015. The upgrade duration should be 21-23 months for other users instead of 24 months.
The program should also drive sales and patronization of the iPhone 6. The big screen edition should attract enough attention and new patrons of the iPhone 6. Apple reportedly plans on releasing another edition of the iPhone with 4.4-inch screen.
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