Verizon just came out with a new plan - buy or bring your own phone and get cheaper rates and we won’t give you a free upgrade every year. Add that to the fact that word on the street is that iPhone 6S will be a minor upgrade with a little more battery life. Realistically, how much more exciting and enticing can a phone get? The jump from clamshell to iPhone was huge. iPhone through iphone 4 was incremental. iPhone 6 offers a large version to complete with Samsung. So where do we go? What will cause big demand that can drive SWKS?
I think we have to count on the rest of the world catching up. China wants to be consumer driven, maybe they will buy new phones. The emerging markets are still stuck in neutral and with China construction ebbing, they are not likely to grow fast. Africa won’t make a dent for a decade at least. Europe will probably recover faster over next couple years as will US. Just not sure.
However, I did buy my first small position last week
China is at a transition point where it needs to move from an investment focused economy to a consumption focused economy to go to the next stage in its economic development. It would be better for the stocks we’re investing in and for the world if it makes this transition smoothly and successfully.
Verizon just came out with a new plan - buy or bring your own phone and get cheaper rates and we won’t give you a free upgrade every year.
This is really just catch up with T-Mobile, I think. My understanding is that the old way the customer was paying for the phone, but at an unknown rate with the payment for the phone buried in the monthly cost. Hence the contracts with a better rate for a 2 year over a 1 year. Of course, the downside was that if one kept one’s plan beyond the time that the phone was paid off, one was still paying the extra, so it really paid to keep trading up.
In the new way, the phone is separate. Buy it elsewhere, buy it outright up front, pay for it so much a month, or in between. When the phone is paid for it is paid for and the total monthly billing goes down. No contract, but quit early and one is still on the hook for the unpaid part of the phone.
Whether this will retard phone sales or speed them up is hard to say. If phones don’t change in compelling ways, then the new way provides an incentive for holding on to the phone longer. But, if the big driver in phone sales is wanting to have the latest thing, then this could actually speed things up, although possibly boosting the used phone market.
We have had these “SIM only” plans in the UK for some time now.
My personal view is that they probably don’t make a huge difference to the time between upgrades, as once the initial contract period ends, it’s always been possible to negotiate a new deal without upgrading to a new phone anyway.
My point is, with the current plans they psychology is “I get a free phone every 2 years, might as well get it”. Now it is “oh, I have a free phone, why should I buy a new one”.
If all the carriers go this way, I believe it will be a negative.