While we used to eagerly anticipate the latest and greatest from new tech rollouts, smartphone announcements, such as Apple’s Special Event on September 9, have gone from glamorous to mundane in short order. In fact, CNET writes, “Our boredom doesn't mean Apple won't sell millions of phones, but it does mean consumers may think a little longer before shelling out cash for an iPhone 6s when their old devices are ‘good enough.’”
Pew Research reports that 64% of U.S. adults own a smartphone, up from 35% in 2011, and 46% say “they couldn’t live without” their smartphone. This brings up an interesting point about service. Individuals are quickly moving away from mobile company phone contracts and toward pre-paid plans that provide them the freedom to seek out and get the best mobile deal. Traditionally, much of the phone cost was built into the cost of the contract, meaning users could pay a small up-front fee for a new phone. Without the contract, users are paying full price, often upwards of $500, for a new phone.
While there was news at the Apple Special Event about the new 3D touch and more Apple Watch features, the real innovation may be theApple iPhone Upgrade Program.Instead of owning your phone, you would lease it directly from Apple. Plans begin at $32.41 per month and include Apple’s warranty program, AppleCare.
This may prove to be a game changer for mobile service providers.ZDnet reports, Apple “removes the carriers further from the customer. Anyone using the iPhone Upgrade Program has a direct hardware relationship with Apple and in a way that encourages yearly updates. That's key because the upgrade cycle has been slowing of late.”
For years, the mobile telecommunications industry has set prices for phones and contracts, and we were tied to their contract cycle before we could upgrade or pay full price to upgrade a device. But as consumers have more buying options, the competition will help drive prices down. Pre-paid phone providers helped drive the industry toward unlimited talk and text and reasonably priced data plans. By breaking the connection between the mobile service provider and the phone consumer, the telecommunications industry is going to have to add new value to compete for customers. For Apple, it means they no longer have to negotiate exclusivity agreements with one service provider as they did with AT&T when the original iPhone launched.
It’s interesting to see one of the most striking technological innovations from Apple is about value and service rather than hardware or software. Sinu’s philosophy has always been that “people matter, objects don’t.” Apple just took that philosophy and brought it to life in a way that could prove disruptive for the mobile telecommunications industry, increase sales for Apple, and provide better value for all of us.