Apple iPhone Upgrade Program's significance forces debate but carriers are feeling its pressure already

By @preciousvsilva on
 iPhone 6s
A customer holds an iPhone 6s during the official launch at the Apple store in central Sydney, Australia, September 25, 2015. Reuters/David Gray

Apple's iPhone Upgrade program received a thumbs up from analysts previously with many citing its role in driving users to upgrade faster than before. Carriers like Verizon are starting to feel pressure but analysts remain at odds whether it is a meaningful addition to Apple's services or not.
 
Apple's iPhone Upgrade Program forced Wall Street analysts to oppose it as its impact remains debatable. Piper Jaffray analyst Gene Munster claimed that Apple's new phone plan will drive customers to upgrade faster than before. It is a “meaningful tailwind" that can spur sales for the next four years or so, he added. 

However, Mizuho Securities analyst Abhey Lamba does not believe the same. His estimates suggested that only a few consumers will sign up for the program. Investors already know about the iPhone Upgrade Program and its potential benefits but that significance has not trickled down to Apple's shares yet, according to Apple Insider. Munster said in his note to investors that the current cycle for an iPhone user in the U.S is around 22 months but it will shorten to 15 months by 2018.
 
"We do not feel shares of AAPL reflect the significance of this trend," Munster said. "In the U.S., the installment/annual upgrades will likely push the U.S. upgrade cycle to an average of 15 months from the current 22 months by calendar year 2018."
The iPhone upgrades should follow a two-year interval even with the new upgrade program, he suggested. 
 
"Our conversations with various iPhone users indicate that upgrade cycles are likely remaining around two years with very few users taking up Apple's upgrade plan," Lamba said in his note.
 
Amidst the debate on the impact of the upgrade program, it did not take long for Sprint and T-Mobile to bring up special offers after Apple announced its new instalment plan. Initially, Verizon appeared resolute with its upgrade policies and pricing, which still remains the same. The company's policies prohibited customers to upgrade to a new phone until they have paid off 75 percent of their existing handset--that is even with an instalment plan.
 
However, it appears the pressure is getting to the company as it has changed its upgrade policy, allowing customers to upgrade their iPhone 6s after 12 months. According to The Motley Fool, Apple's new program remains a threat to wireless carriers because the company is offering unlocked iPhones at the same price as the locked iPhones, under other networks.
 
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