Big deal
No sooner did I predict new Apple Music streaming deals from key carriers yesterday than mercurial CEO, John Legere delivered. T-Mobile has announced what could end up being this season’s most attractive carrier deal for iPhone.
It consists of:
Music Freedom: Apple Music subscribers will now be permitted to stream as much music as they like over T-Mobile’s network for no additional charge – no more worries about devouring the bandwidth. (39 percent of US users avoid streaming music using their devices because they fear bill shock).
The next iPhone: T-Mobile will offer anyone purchasing an iPhone 6 from now on a(priority) upgrade to the next iPhone model at the same locked-in $15/month price. “When customers are ready to upgrade, they walk into a store, hand over their existing iPhone 6 or 6 Plus and walk out with an upgraded iPhone – nothing out of pocket and no increase in monthly cost.”
I’m pretty certain US technology sites will be taking a close look at T-Mobile’s announcements on this, but I think anyone reaching the end of their contract over the next quarter will be thinking about dumping their old carrier in favor of Legere’s.
More coming
I don’t imagine this will be the only deal. Across the planet carriers are looking for ways to seize customer loyalty and reduce customer churn, at the same time as positioning their brands for the mobile era.
The digital transformation of everything puts mobile at the center of almost every interaction, and switched on carriers recognize that to exploit this they must deliver more than bandwidth. The digital customer is at the center.
What Apple brings to this is demand.
We know that smartphone sales slumped dramatically in the months before the company shipped iPhone 6. This year we are already seeing similar slumps in smartphone sales. iPhone sales failed to meet predictions in the last quarter, suggesting consumers are already deferring iPhone purchases in anticipation of the new device. Not such a surprise when everything we hear about the next-gen model says it will be an outstanding release.
Demand spike
Apple has already factored this within its financial projection, which is why the stock market ran scared of AAPL shares in recent days.
Let’s quickly review global iPhone sales since 2010:
2010: 39.99m
2011: 72.29m
2012: 125.05m
2013: 150.26m
2014: 169.22m
Assuming most customers are locked into a 18-24-month contract, then this year’s iPhone will appear as around 150 million people reach the end of theirs. That’s millions seeking a new contract – millions of people T-Mobile may attract with its new iPhone deal. (34.4 percent of existing iPhone customers planned to get an iPhone 6 when it shipped last year).
What’s different this year is that in addition to the new iPhone, Apple now also offers attractive supporting products and services, including (but not confined to) Apple Music, Apple Pay and, indeed, Apple Watch.
This growing ecosystem of complementary solutions may prove a mighty temptation to consumers – and if they migrate to T-Mobile now, they’ll get the next iPhone for $0 down and $15/month across 18-months.
Resale
Apple may sell a lot of phones, but it looks likely T-Mobile will win a lot of customers this season – particularly following a record low upgrade rate at AT&T.
If you do plan to sell your old iPhone to make way for the new model now is the best time to do the deed, because resale values drop by around 10 percent in September and October, according to gadget trade-in site NextWorth. Though it is arguable the strong resale value iPhones maintain is part of how T-Mobile is able to finance the deal in the first place.
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