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> iPhone 17 pro max would be $1199 to buy (~1273 with tax) or $34.99 for 24 months totaling $839.76. So would cost 433.33 at the end of the lease to keep it A
by paxys 3mo ago
> iPhone 17 pro max would be $1199 to buy (~1273 with tax) or $34.99 for 24 months totaling $839.76. So would cost 433.33 at the end of the lease to keep it
A lot of people aren’t going to have that $433 at the end of the lease to purchase the device outright, and so will have to roll it into another 2-year monthly payment, and another one after that.
So the goal of the program is the same as every other similar one - they want to turn a one-time device purchase into a perpetual monthly revenue stream, while keeping ownership of the asset at the end.
- lesuorac 3mo ago> while keeping ownership of the asset at the end. But they're not actually interest in owning 2 year old phones though right? They're just interest in you / 2ndary market not owning any?
- paxys 3mo agoA refurbished iPhone 15 Pro is selling for $929 on their website right now. Trade in price for that exact model is $410. So yes they are very interested in that old phone.
- Aurornis 3mo agoI take it you’ve never purchased an Apple refurbished product? They’re in excellent condition. They do not look like 2-year used and abused trade ins. If trade-ins are going back to the refurb inventory (which I don’t know if they do) then it’s only after extensive actual refurbishment and new parts. They’re not putting it back into a box, listing it for sale, and pocketing the difference.
- ToucanLoucan 3mo agoIt's still obviously making them money. How much, who's to say, likely highly variable depending on the condition of the phone. But if it didn't make them money they wouldn't do it, they're not a charity. I'd imagine even a phone they can't fix to sell still has some value, even as scrap to them especially as the costs of every damn material that goes into any electronic device continue to soar. And that all being said: two things can be simultaneously true at once. Leasing is a perfectly valid form of... well you can't really say ownership, acquiring goods I guess? And it also does mean Apple can now turn what may have been one-shot purchases into people who are just fine paying a monthly payment ad infinitum. And that, in turn, opens the door for keeping people on a perpetual new-phone treadmill of monthly payments that involve them never actually owning anything. You can very easily tie this into the Samuel Vimes Boots Theory of Economics: The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles. But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
- Aurornis 3mo ago> It's still obviously making them money. They’re obviously making money on the whole purchase and program because they’re a business, not a charity. The assumption that they’re making significantly more money on this than direct sales may or may not hold. It could be that they’re targeting a similar level of end-to-end profit as direct sales but using this to expand their market by providing more purchasing options. Some people get angry at the prospect of a company making money, but they’re not charities. Everyone should do the math and decide which purchase options work for them. What works for you may not be appropriate to force on to the rest of the population.
- smallmancontrov 3mo agoSince the days of Samuel Vimes, durable goods have undergone spectacular deflation and health care, housing, and education have undergone spectacular inflation. One month of median US rent buys three 55" TVs. The math has changed.
- s0rce 3mo agoDurable goods also seem much less durable. I go through way more fridges, dishwashers, etc then previously.
- blackqueeriroh 3mo agoReally? How many fridges have you gone through in 10 years? This might be the way you treat things, because for me and mine all of these are still a single digit: 1.
- paxys 3mo agoThe internals in that phone are probably worth more today used than brand new 2 years ago.
- fckgw 3mo agoThey have the ability to tear the whole thing down to guts and screws. They absolutely do replace the case, glass and battery and sell as refurbished. They already do complete case swaps on their Macs.
- ezfe 3mo agoThe ones that are not in great condition get sent to third parties and sold for slightly less. But Apple will replace the screen or battery and sell them themselves as well. I've gotten Apple refurb products with minimal signs of wear.
- Aurornis 3mo ago> A lot of people aren’t going to have that $433 at the end of the lease to purchase the device outright I think you're looking at this too much from the perspective of someone who wants to own the phone, not as someone who wants to consider a lease. Leases are not a new invention. A lot of people, including very financially savvy and well off people, choose to lease rather than buy depending on the circumstances. It preserves optionality. If you get to the end of the lease period and there’s a new iPhone you want or the battery isn’t holding up, you can choose not to buy it. You don’t have to deal with selling it or trading in. If someone doesn’t have $400 to buy out the residual then I doubt they would have had the cash to pay for the whole thing up front. I don’t understand what your argument is. > So the goal of the program is the same as every other similar one - they want to turn a one-time device purchase into a perpetual monthly revenue stream, while keeping ownership of the asset at the end. It’s an option. They’re not turning anything into anything. Anyone who wants to buy the device can buy it. You now also have the option to lease it for 12 or 24 months and then after that you can still buy it if you want. Or you can not buy it. It’s options. You don’t have to use it.
- paxys 3mo ago> If someone doesn’t have $400 to buy out the residual then I doubt they would have had the cash to pay for the whole thing up front. That’s the entire point. They would have bought a cheaper phone, or held on to their old one, but are now paying perpetual monthly payments. There’s a reason car dealerships never ask “how much can you afford”, but “how much do you want to pay every month”. There’s a reason Klarna is running the program for them.
- Aurornis 3mo agoYou know those financially irresponsible people don’t need this program, right? They would have used a credit card to buy it with much worse terms You seem tilted at Apple for offering a financing option, but your real gripe is apparently with some people who have poor financial decision making skills. Those people could (and probably would) do a lot worse with traditional options like a credit card. Can we at least compare apples to apples (hah) and look at the actual terms of the program here? Honestly they're not bad, and I say that as someone who leans toward purchasing outright.
- quickthrowman 3mo ago> A lot of people aren’t going to have that $433 at the end of the lease to purchase the device outright If someone can’t plan ahead 2 years for a $433 expense, they definitely should not have a top of the line iPhone. When my income was low I had an iPhone SE that cost $329.
- paxys 3mo agoWell there’s a reason Americans have $1.25 trillion in credit card debt.
- maratc 3mo agoNow let's count their mortgage debt.
- thisislife2 3mo agoIf everyone was as rational as you, Americans wouldn't be living in debt that most cannot afford. Most Indians have a healthy fear of debt, and that is why the iPhone doesn't have a larger share of the mobile phone market here as it really is unaffordable to most Indians (as it is for many in America). Americans however have accepted debt as a normal part of their lifestyle. When a rich man says poor people shouldn't be ordering food through Door Dash, it sounds very cynical but there is a basis of truth in it that some poor people really do not know how to manage their finances.
- blackqueeriroh 3mo agoThis is not why Americans are in debt. If you really think this you understand so little. That rich man was born into wealth, so he has no concept of the lives of poor people.
- thisislife2 3mo agoI wasn't making a general statement on the American poor (poverty and debt can turn into a vicious cycle, sometimes one has no choice but to borrow and there are complex political factors at play too that is driving American poverty), and only on what we are discussing - Poor Americans who don't mind getting into debt to buy an iPhone (or some other luxury item) even when affordable alternatives are available. You can't really disagree with me that it is poor financial judgement to give into your wants over your actual practical needs, when you can't afford to do so.
- bijowo1676 3mo agoits not that they wont have $433, it is that people will be unwilling to shell out $433 for two year old device, if they have an option to renew it for a shiny new model and roll forward into another BNPL loan
- gruez 3mo agoI checked the price for a used iPhone 15 pro (ie. 2 year old iPhone) on ebay and it's around $400-$500. Therefore the implied depreciation of the lease is pretty fair, unlike the lowball offers you typically get for trading in a phone.
- DarmokJalad1701 3mo ago> roll forward into another BNPL loan It is not rolled forward. If they don't want to pay the $433, then they don't. They return the device and the new device's lease doesn't include that $433. It's not like a used car loan that some people have that keeps growing with each transaction (and at insane interest rates).
- giancarlostoro 3mo agoLet's suppose that Apple somehow doesn't release any new iPhones during this leasing window, what happens then? Does Apple ship you back a new phone that's essentially the same model? I know this is unlikely, but I am curious. The other thing to consider, that while Apple might sell you the phone for $400 or whatever, they might re-sell it as refurbished for $700.
- tw600040 3mo agoSomeone who won't have that $433 has no business even thinking about a 1200$ phone in the first place
- paxys 3mo agoHave you met…America?
- PunchyHamster 3mo agowait till you see what people do with car payments
- Zambyte 3mo agoSelling my car that I fully owned in favor of a nice bicycle and an e-scooter was one of my best financial decisions in the last few years. I don't have to deal with insurance, parking (if parking is free by you, it shouldn't be), maintenance (I work on them myself, I just pay for cheap parts), and fuel is effectively free. That's all on top of the car payment for people who haven't paid off their car.
- frmersdog 3mo agoGenuinely wish I had done so when I lost my job at the beginning of the pandemic. I've dumped so much money into a vehicle that's falling apart, which I've driven probably less than 25k miles since. If you can't justify car ownership with your income, they're a money pit.
- harvey9 3mo agoMy car is fully owned and justified by my commute taking 3x longer by bus. Time saved is as important a measure as miles driven.
- frmersdog 3mo agoSo was mine, but time saved driving didn't justify the amount of maintenance I would have had to do on my car/sanity with 5 min in car + 2 hours on a coach vs 50 minutes fighting interstate traffic + paying for parking.
- ezfe 3mo agoIt doesn't get "rolled in," since you don't have to transfer any liability to the next lease.
- ksec 3mo ago>they want to turn a one-time device purchase into a perpetual monthly revenue stream, Precisely what they should have done for service revenue instead of milking App Store for the past 10 years. They should also have bundled Apple Care as part of it. It would also allow them to hike up their price for iPhone. For example I wouldn't be surprised if the upcoming iPhone Fold and next year's iPhone 20 / XX start at $1499 to $1999. My question is how will this roll out world wide, is this going to be like Apple Credit Card, Apple Cash and other things that is US only? Who is actually paying for the interest free loan. Somewhere along the line someone has got to give. This is all good direction that is happening in the past 12 months, MacBook Neo, Apple Upgrade. Hopefully they will also fix the software part. macOS doesn't need annual upgrade. Perhaps neither do iOS. And the last thing would be about the App Store. But I guess that will take a lot longer.
- tshaddox 3mo agoIsn't the 0% APR financing essentially just a sales expense? Even if people generally don't immediately roll into another 2-year agreement, the main reason zero-interest financing works for the sellers is simply that it makes it easier for people to spend money on expensive high-margin stuff. Multi-year zero-interest loans are also commonplace in high-price, high-margin specialty retail: think La-Z-Boy, Sleep Number, home improvement, hot tubs, home gym equipment, etc.
- paxys 3mo agoThey also charge heavy interest and fees to people who miss payments, but in this case that will be captured by Klarna.
- tshaddox 3mo agoYes, and for most of those retailers I mentioned the financing is handled by e.g. Synchrony Bank.
- blackqueeriroh 3mo agoKlarna does not charge interest or fees to people who miss payments.
- paxys 3mo agohttps://www.klarna.com/us/help/payments/what-happens-if-i-can-t-pay-on-time/ https://www.klarna.com/us/help/payments/what-happens-if-i-ca... > Late fees: what to expect > Late fees may apply if your payment isn't collected after multiple attempts: > Pay in 4: A late fee may be charged per missed payment. > Pay in 30 Days: Be sure to pay on time to avoid late fees. > Pay over time: Late fees and interest may apply as outlined in your credit agreement. Unlike what a lot of people in this country think, Klarna is not free money.
- maxerickson 3mo agoProbably the better way to look at it is that the finance charges are built into the price.
- apparent 3mo ago> So the goal of the program is the same as every other similar one - they want to turn a one-time device purchase into a perpetual monthly revenue stream, while keeping ownership of the asset at the end. Yep, which reduces the need to make new devices notably better than old ones, since you'll always have a steady stream of customers coming off their leases.
- blackqueeriroh 3mo agoAre you seriously arguing that Apple is doing this so they don’t have to keep making devices any better? I just want to be very clear about this.
- apparent 3mo agoThat gets it backwards. They're not doing this because they want to make devices that are less compelling purchases, but they are aware that their coming pipeline will in general not as be compelling to potential upgraders as in the past. This is largely because the category has matured, and people don't feel the need to upgrade nearly as often as 5-10 years ago. By getting people to be default-subscribers rather than purchasers who may decide to upgrade, they improve their odds of keeping a larger chunk of their hardware revenue stream.
- trollbridge 3mo agoGiven how rapidly iPhones depreciate, being able to just give it back after 2 years is pretty reasonable. My 16 Pro Max is worth maybe $500 on the resale market.
- notyourwork 3mo agoHave to milk the economic tit for all it’s worth.
- jay_kyburz 3mo agoI would have thought this was about Tax. I'm sure its different in every country, but I believe a lease is very different to purchasing hardware.
- rsynnott 3mo agoThat is largely only relevant to businesses (where it may indeed be very different). This seems to be a consumer programme.