Equipment Installment Plan is not new in the phone industry since various carriers like T-Mobile, Sprint, and Verizon offer such program. In response to this, iPhone Upgrade Program is also introduced in the public to reach out more customers and encourage current iPhone users to do upgrade at a very affordable cost. In addition to the iPhone upgrade, customers also have the option to add AppleCare+ for warranty, lost, and stolen purposes. This alone may serve as a threat to its competitors.
The Motley Fool mentioned that Verizon, AT&T, T-Mobile, and Sprint have responded in the competition by not offering any subsidized phones and instead with the offer of installment plan. Apple also introduced iPhone Upgrade Program to give an option for people not to buy subsidized iPhones anymore. As such, a new iPhone may cost as much as $199 only per month.
Nonetheless, related report said that Apple has more to offer in terms of its installment plan than other companies. First is the company offers a very low price tag over new iPhones with the ability to secure the device through AppleCare+ bundle. Second benefit is the shorter time period for iPhone upgrade compared to other carriers. These are the benefits that customers can experience over iPhone upgrade which also may serve as a threat in the phone industry.
On the other hand, Roger Kay, president of tech consulting company Endpoint Technologies stated in Market Watch, "You could say that Apple and its frenemies are trying to disintermediate the carriers." This is due to Google Inc. and China's Xiaomi Inc. which are offering its own strategies to gain more customers and increase its revenue.
As per the preliminary findings of BGR, sale of the new iPhone products may reach for up to 11 to 13 million units this weekend. If this is the case, Apple's record sale from last year may be surpassed by this year's sale. In the past, there were 10 million iPhone 6 units sold during the opening sale while initial iPhone 5S sales reached 9 million, the report added.
Other competitors in the phone industry may see Apple's strategy as a risk in its revenue status. This may also affect its valid customers transferring to iPhone Upgrade Program due to the company's flexible offerings.
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