Apple’s announcement on Wednesday was chock full of shiny new hardware: new phones, new tablets, a new TV-set-top box. But perhaps the most important announcement from the company—and definitely the most intriguing one—was nothing more than a new business arrangement.
I’m talking about the iPhone Upgrade Program, a new program that will let people pay a monthly fee and receive, in exchange, a new iPhone every year. They’ll also gain access to AppleCare+, the company’s extra-special extended warranty program. AppleCare+, unlike normal AppleCare, fixes "incidental" damage and, for a fee, will replace a cracked screen.
The new program mimics other subscription-style programs from cell carriers that let users “upgrade” to a new phone once (or more) per year. As with those programs, subscribers won’t be able to back out of Apple’s plan whenever: They’ll be bound to their iPhone Upgrade Program contracts for 24 months. But they can receive a new phone—and lock back into another two-year contract—after 12 months of payments.
So just how large is one of those payments? For the least expensive iPhone, the 16-gigabyte iPhone 6S, the monthly fee is $32.61. Sixteen gigabytes of internal storage is not enough for most users—especially on a phone that shoots hi-def video—so let’s look at the next step up, the 64-gigabyte model. Under Apple’s program, a 64-gigabyte iPhone 6S will cost $36.58 per month, $438.96 per year, and $877.92 over the term of its contract. (An unlocked 64-gigabyte iPhone 6, by comparison, goes for around $782 on Amazon.)