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?