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The annual iPhone launch is the biggest product of the year for Apple Inc (NASDAQ: AAPL), but it’s also a major sales catalyst for wireless carriers Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T) and T-Mobile Us Inc (NYSE: TMUS).
Incentives for carriers: Bank of America analyst Wamsi Mohan said this week that the incentives offered by these carriers can have a major impact on iPhone replacement cycles. Mohan estimates that customers will pay an average of $ 100, or $ 300, including Apple Care, upfront for the new iPhone 13 if they change carriers and / or sign a new two- to three-year contract.
“Trade-in promotions suggest that carriers want customers to upgrade their iPhones roughly every 2-3 years (maximum trade-in benefit of up to $ 1,000 versus much lower trade-in values for older iPhones ($ 350-400), ”Mohan says.
Related Link: Is Apple Stock Overvalued Or Undervalued?
Growing secondary market: As a result, he said, there is now a large and growing secondary market for faster high-end used iPhones that could end up putting pressure on sales of new, low-end iPhone models.
Verizon is currently offering $ 800 credit to an iPhone 13 for trade-in for an iPhone X or newer in select unlimited plans. This promotion roughly matches the $ 800 credit for an iPhone 12 for trade in iPhone 8s or newer models that it offered a year ago.
AT&T offers a nearly identical $ 800 credit for iPhone X or newer models.
T-Mobile offers Magenta Max plan customers up to $ 1,000 credit for iPhone 11 or 12 Pro / Pro Max model trade-ins and up to $ 800 credit for iPhone 11, 12 or X.
For the moment, Mohan maintains a cautious stance for Apple given concerns about potential supply chain disruptions. Bank of America has a neutral rating and a price target of $ 160 for Apple.
Benzinga’s point of view: Nothing in the updated carrier promotions suggests that consumers will behave any differently than they did regarding the iPhone 12 promotions last year.
The main difference between the latest iPhone cycle and the current cycle is the potential for significant supply chain disruptions, which could delay shipping and even potentially push back demand for next year’s iPhone models in. the worst of cases.
Photo: Courtesy of Apple
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