Do you own an iPhone 4S? If so, you and tens of millions of others like yourself in the United States and abroad won’t qualify for a fully subsidized upgrade this fall. Blame it on the disparity between yearly iPhone cycles and carriers’ policy of locking smartphone buyers with two-year contracts.

Apple’s phone is enjoying stellar sales, moving 37.1 million units last holiday and 35.1 million last quarter, thanks partially to last summer’s pent up demand.

The question is, will iPhone 4S owners – now locked into wireless service contracts and not eligible for fully subsidized upgrades – be willing to pay extra to obtain an early iPhone 5 upgrade this fall?

That’s what BTIG analyst Walter Piecyk set out to analyze in his research note issued to clients today.

As relayed by Boy Genius Report, the note reads:

For over a year, AT&T has enabled its customers that are six months into their contract to pay $250 to obtain an early upgrade. This would effectively enable the customer to buy the basic level iPhone early for $450 rather than wait the full 21 months to reduce that price to $200.

After attending an AT&T analyst meeting, Piecyk walked away under impression that Apple’s next iPhone could see weaker demand due to this upgrade cycle.

AT&T’s de la Vega indicated that this offer has generated very little interest from their customers, who typically end up waiting ’till the day they are eligible’ before upgrading with the full subsidy.

And the executive isn’t so convinced that an early upgrade fee would help fuel demand.

Furthermore, he does not expect customer interest in this early upgrade offer to increase notably with the expected launch of a new iPhone later this year, when we estimate that the vast majority of AT&T iPhone customers will not qualify for an upgrade.

This isn’t new, of course.

Would you accept an early upgrade fee if the next iPhone looked like this 3D render?

Apple’s and carriers’ respective upgrade cycles align every two years.

And as much as the iPhone 4S is a smash hit, anyone who has one won’t be eligible for a fully subsidized iPhone 5 upgrade this fall.

Half of iPhone buyers in the U.S. are repeat customers, Asymco analyst Horace Dediu estimates. Assuming 90 percent upgrades (wow, Apple loyalists much?) for two-year old purchases, Dediu forecasts a total of 90 million iOS device sales to existing users in 2012.

And herein lies a catch: Apple’s loyal customer base becomes a double-edged sword, especially if the next iPhone is just an evolution lacking a major industrial design overhaul, as the rumors indicate.

Taking it all in, Apple might face serious hurdles selling an estimated 50 million iPhones this holiday season. And if last summer is anything to go by, expect swirling iPhone 5 rumors to hurt June quarter sales as would-be buyers withhold planned purchases in anticipation of the next iPhone.

Would you be willing to pay an early iPhone 5 upgrade fee?

Does the next iPhone seem to you like a must-have handset, upgrade policies be damned?

  • I have 3 Iphones on my at&t acct for my family bought in 1 yr incraments so I always qualify for an upgrade. My wife and daughter gets the hand me downs every year….

  • Well I guess I don’t have to worry about that, as this policy doesn’t exist in Australia 😀

  • I’m curious why both lines on our AT&T account have been able to get every single iteration of the iPhone since iPhone 1 every single year on launch date without any hassle whatsoever for full subsidized price?

    I usually sell my current iPhone on eBay for $200 (very easy to do) and then buy the new one with said $200 making it a free upgrade.

    I haven’t paid for an iPhone since the first iPhone when it was $500 with contract.. Please explain?!

    • Falk M.

      You sell your current-gen iPhones in working state for 200 bucks on eBay?
      Save the ebay fees and ring me up next time directly LOL

    • What about the sales tax and upgrade fee? That’s another hundred bucks. Do you auction it, or use the eBay instant sale app? It offers $280 for a “good” 16GB iphone 4 with free ship!

  • I likely won’t be upgrading from 4 to 5 or “the New” until there’s a JB for it. So far, an iphone without a jailbreak is just agonizing…

  • Why is this news? This is different than any other iPhone release in the past how? And look at the past iPhone sales. U have plenty of iPhone 3GS an iPhone 4 people waiting to upgrade. That is where the majority of sales will come from.

  • What if I have a 4s factory unlocked from apple??

  • How is this a shocker? I always had 2 year waits for upgrades…

  • There are a lot of arguments over the first generation of each series (ie: iPhone 3,4,5 vs the S version). I adopted the iPhone during 3GS because I felt it was the 3 done right. Even though the design is the same, it comes with improved hardware, how I feel a product should be. If you go by 2 yr cycles based on the S models, you will always end up with the best iPhone of each generation. therefore, I will get the 5S for sure.

    – my 5 cents

  • Bill

    It’s a ‘rendering’. not a

  • Johnnyboy361

    This is so weird. I have gotten the 3gs, 4, and 4s each and every year for the usual 200 dollars (16gb wifi version). Each year, AT&T said I was eligible for the full discount. No way will I pay 450 to upgrade to the iphone 5.

  • Buzzygwood

    If AT&T would just let me upgrade for $199, I would do it. But unfortunately for them (are you listening AT&T?) as soon as my contract is up, I’m jumping ship. You could lock me in for another two years! Instead, in 8 months, you will lose me. I’m going to call and inform them of this fact. Maybe they will wise up and do the math. They’ll make more off me in the long run if they just let me buy the phone for the (truly) discounted rate. Funny — when I called the rep yesterday, she said, “you qualify for an early upgrade which is the price of the phone PLUS A LITTLE BIT MORE.” After pressing her, she finally clarified what “a little bit more” meant. Not $50 more, not $100 more, not $150 more, not $200 more, but about $250 more. If i want the $199 version, it’ll cost me $450.” I suggested that in the future, she should instead tell customers, “you qualify for an early upgrade which is the price of the phone PLUS A LOT BIT MORE.”

  • Jonprofeta

    Well they pulled the same thing on me. I cannot get an upgrade until may of 2013. But I found a way around this. All you have to do is ad another line

  • Jonprofeta

    When you add the line all you have to do is get a cheap to go phone and activate the go phone. Put the iPhone 5 on your original num. it’s only 9.99 extra a month. In the end you can cycle through upgrades between your phones and always have the latest phone.

  • i bought the iPhone 4s factory unlock 4 days ago, and i’m gonna return it, so i can get full refund and get the new iPhone 5 with 2 years contract.

  • Farexynex

    so what they mean iphone 5 wont get the ios8 ?