By Angela Palumbo
Phone carriers have been using promotions to juice iPhone sales while enrolling customers in more expensive service plans.
The iPhone 14 went on sale Sept. 16 and is available in four different models ranging in price from $799 to $1,099. During a period of rampant inflation, Wedbush analyst Daniel Ives told Barron's that there was initially a concern demand for the new iPhone 14 would be weak.
The opposite seems to be happening, especially with the more expensive iPhone 14 Pro and Pro Max models. A big reason is that carriers are pushing out aggressive promotions so that shoppers pay little or nothing for the phone.
"Given the current inflationary environment, carrier incentives allow iPhones to be more affordable as they bundle iPhone financing (free with eligible trade-in under select plans) with telecom services under one monthly payment, and spread out the cost of iPhone over 24/36 months," BofA Securities analyst Wamsi Mohan wrote in a research note Wednesday.
All of the carriers' promotions are a little different. For the iPhone 14, T-Mobile U.S. is offering up to $800 credit when customers trade-in their iPhone X or newer and enroll in select unlimited data plans. Verizon and AT&T have similar offers with $800 phone credits, but Verizon requires that the trade-in be a iPhone XR or newer and AT&T requires that it be a iPhone XS Max or newer.
For the more expensive iPhone 14 Pro and Pro Max, all carriers are providing credits of up to $1,000 for customers enrolled in their unlimited data plans.
Mohan, who rates Apple as a Buy with a $185 price target, said that he expects carriers "to continue with aggressive deals as they compete to gain market share." This battle between carriers has been going on for years, and earlier this month T-Mobile pushed ahead of Verizon and AT&T in market capitalization.
Mohan also wrote that these deals are good for iPhone demand.
Shares of Apple were up 0.2% Wednesday to $157.14 while the S&P 500 gained 0.5%. The stock has fallen 12% this year.
Write to Angela Palumbo at angela.palumbo@dowjones.com
(END) Dow Jones Newswires
September 21, 2022 15:28 ET (19:28 GMT)
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