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Does Apple’s New Product Cycle Spell “Change” for Phone Carriers?

 

This Fall, Apple emerged with a new set of products for the tech market: (1) the esteemed iPhone 5, (2) fourth-generation iPad, and (3) fifth-generation iPod Touch. There was a time when Apple presented new products to the consumer public once a year. You could purchase an iPad or iPhone and expect it to be the “latest and greatest” for an entire year before it turned old. With the latest iPad (iPad 4), the one-year trend is starting to change. It has been only nine months since the iPad 3 with Retina display was introduced. IPad 3 owners who saw Apple’s September presentation were angry and sounded off at Twitter about their disgust with a new iPad just months after purchasing their own.

IPad owners, however, are not the only ones who will start to turn angry at every new presentation: iPhone owners will now join the fold. Tech sources report that Apple intends to present a new iPhone (labeled the “5S”) and a new iPad (labeled the “iPad 5”), to the consumer public in March or Summer 2013. Within six to eight months of its iPhone 5 presentation, Apple customers will have to drool while latecomers – those who decided against buying the iPhone 5 – purchase the new iPhone instead. The iPhone 5, for all its impressiveness, is nothing more than incremental updates to the iPhone 4S (faster processor chip, new lightning adapter, and so on). One can only hope that the new iPhone will provide something extra for iPhone lovers.

With Apple starting a new product cycle of 6-8 months, how will carriers adjust? At the present time, carriers present customers and consumers with required 2-year contract agreements; this means that, unless you are willing to pay a $350 termination fee to enter into a new contract, it “pays” (pun intended) to stay in your contract for 24 months. New rewards plans with phone carriers (such as US Cellular’s “Belief” Project) count towards reducing the number of months a customer must remain under a contract; at the same time, however, phone carriers require you to accumulate approximately 40,000 points or so before you can reduce your contract down by one year. At the moment, I only have a little over 2,000 points in a five-to-six-month contract.

Apple desires to make money off of its products; at the same time, phone carriers want to gain some money back from the expensive subsidies they have had to pay Apple to sell its iPhones (carriers pay $400 on each iPhone, while carrier customers pay only $200). If Apple introduces new phones every six to eight months, customers will be in a bind because of their 2-year contracts—and carriers will be in a bind because customers will be unhappy with using their iPhone for the next two years). Apple analyst Gene Munster believes that Apple will solve this problem by introducing a $200, unsubsidized iPhone in 2014. If Apple does, it will be a dream come true for the millions of phone customers whose small carriers cannot and will not sell iPhones in its network. Until 2014, then, I guess we’ll just have to wait and see.