Why Don’t Device Manufacturers Just Start Leasing Phones To Consumers?

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(William Hook) When phone carriers like Sprint and T-Mobile are happy to rent phones to customers, and Apple is the one phone manufacturer with its own network of stores to sell phones directly to consumers, what’s there to stop Apple from just leasing phones to customers directly? Even carriers would like this idea better, since they could sell iPhone leases instead of needing to buy them from Apple first. Everyone wins… but would consumers like this idea? This isn’t something that Apple is planning, as far as we know, but is just a proposal from an equities research company thinking ahead to the future of the wireless industry and of how mobile device manufacturers could maximize Now all of the major U.S. carriers prefer selling devices for a flat price or financing them over contracts with device subsidies, and some no longer offer contracts at all. Device leasing is an alternative that carriers could offer to customers scared of the real sticker price on a smartphone, and the best part is that customers bring them back, creating a better supply of used devices that haven’t been used for a full two-year upgrade cycle. Think of phones like cars: when you’re done paying off a car, you might want to keep it as long as possible to enjoy life without a car payment. People are behaving the same way with phones once they finally pay them off after 12, 18, or 24-month terms. Putting customers on leases would force them to upgrade more often. That would be great for carriers and phone manufacturers, but not necessarily for customers. Smartphone leasing; the preferred model of US carriers, and a win for AAPL too [Macquarie Research] Apple Could Lease IPhones to Help Spur Upgrades: Macquarie [Bloomberg]

1. by Laura Northrup
2. via Consumerist

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