Apple’s iPhone Upgrade Program in the United States

In the earlier parts of this series, we learned about Apple’s (AAPL) new iPhone 6S and 6S Plus models announced at a September 9 event. Now we’ll look at a new financing plan the company started for these new models of iPhones. The company is starting the annual iPhone Upgrade Program for these new iPhone models at Apple’s US retail stores starting September 25, 2015.

According to the company’s press release, “Exclusively at Apple’s retail stores in the US, customers can choose their carrier and get an unlocked iPhone 6s or iPhone 6s Plus with the opportunity to get a new iPhone annually and AppleCare+ on the new iPhone Upgrade Program with monthly payments starting at $32 (US) and $37 (US), respectively.” The press release highlighted that this is based on certain conditions, including “a 24-month installment loan” and “iPhone activation with a national carrier.” These national carriers are Verizon (VZ), AT&T (T), Sprint (S), and T-Mobile (TMUS).

The iPhone Upgrade Program may positively affect the upgrade cycles of iPhones. According to a report in the Wall Street Journal, citing Chetan Sharma’s data, the average duration of the upgrade cycle for iPhones was 18.2 months in 2010. It has increased to 26.3 months in 2015.

This is particularly significant considering that, according to Apple, a relatively small proportion of customers upgraded to iPhone 6 and iPhone 6 Plus. And ~73% of the customers had not upgraded to these models as of July 21, 2015.

You can take a diversified exposure to Apple by investing in the PowerShares QQQ (QQQ). The ETF held ~13.2% in the company on August 31, 2015.