Apple announced the iPhone 6S and 6S Plus today. And if you want one, Apple would like you to think that it's business as usual. You can preorder them starting September 12th, and they'll be available on September 25th. The 16GB iPhone 6S starts at $199 on-contract, and 64GB and 128GB versions will be available for $299 and $399, respectively. The 5.5-inch iPhone 6S Plus is priced slightly higher at $299, and it too is available in 64GB and 128GB options ($399 and $499, respectively). Easy.
These days, buying a phone requires some math
But these prices aren't quite as meaningful as they have been in years past, because major carriers have trended away from traditional two-year contracts and toward 24-month payment plans. This way, instead of paying a large chunk of the cost of the phone up front when you sign a new contract, companies like AT&T and Verizon spread that cost over the life of your plan. So today, Apple announced its own version of this: the iPhone Upgrade Program.
Up front, Apple tells you four things about its new Upgrade Program. First, you'll be able to get a new iPhone every year. Second, the phone is unlocked — you can choose which carrier you'd like to use. Third is that you'll be able to pay for the phone with "low monthly payments," instead of paying the subsidized cost of the phone up front. And fourth is that the Upgrade Program comes with AppleCare+.
Read next: The iPhone 6S review.
That sounds like a decent deal, especially with the inclusion of AppleCare+. But is it really? Let's break it down piece by piece, and see how it stacks up against the major carriers, using the base iPhone 6S and all the 24-month plans as our reference.
New iPhone every year
The iPhone Upgrade Program is basically just a 24-month installment agreement, much like the ones being offered by the four major US carriers. Once you've paid 12 monthly installments as part of that agreement, you'll be able to swap your phone for a new one. Just remember — this essentially resets the clock on the 24 months, meaning that you're now starting another two-year agreement. What Apple hasn't shared yet is information on whether (or how) you can opt out of that agreement.
The major carriers typically offer you the option of paying the remaining balance of the value of the phone if you want out of their agreements early, and each has its own structure for when you can upgrade. AT&T will let you upgrade your phone after 18 months, Sprint will let you upgrade "whenever the latest iPhone is released," and T-Mobile will let you upgrade after 12 months. (T-Mobile also offers a program called Jump on Demand that lets you upgrade three times per year, but we're talking iPhones here — and only one gets released every year.) Verizon's payment plan is the worst here — you can only upgrade your phone when the 24-month installment plan has been paid off in full.
The phone is unlocked
Apple will sell you an unlocked phone as part of the Upgrade Program, which means you can take it to any of the four major carriers for the service of your choosing. You shouldn't have a problem bringing the phone to any of the carriers for activation, and it means you can jump from one to another if need be.
Buy a phone through the carriers, however, and you'll obviously lose this luxury. Carriers tend not to sell unlocked phones (Verizon is the exception here), and when they do, the installment plans they offer are most certainly not applicable.
Low monthly payments
This is the meat of Apple's new program, and where its value truly comes from. A 16GB iPhone 6S will cost you $32.41 per month, according to Apple, and prices scale up accordingly with bigger storage options as well as the iPhone 6S Plus. This includes the $129 cost of AppleCare+, which gives you a two-year warranty and allows for two full replacements of the phone if you accidentally damage it (at $100 per replacement, of course). The installment plan is financed by a loan from Citizens Bank, which means — like with the carriers' payment plans — you'll likely have to pass a credit check before you get your phone. You also have to schedule an appointment to buy your iPhone in-store — you can't buy into the iPhone Upgrade Program without getting off your couch.
You can't buy into the iPhone Upgrade Program without getting off your couch
Now, the carriers all advertise monthly payments lower than what Apple tells you up front for the 16GB iPhone 6S. Verizon's 24-month payment program and AT&T's "Next 18" 24-month plan each cost $27.09 per month. T-Mobile’s standard 24-month program costs $27.08 per month, while its "Jump on Demand" option, which lets you upgrade up to three times per year, costs $27.00 per month. And Sprint's "iPhone Forever" program is quoted at $22.00 per month. But these prices don't include insurance. When that gets added in, each of the carriers' payment plans — except for Sprint's — winds up being $2 or more a month than Apple's.
It comes with AppleCare+
Part of the attraction of the new iPhone Upgrade Program is that it includes the AppleCare+ insurance, which — outside of the program — costs $129 for the iPhone 6S and 6S Plus. AppleCare+ extends your hardware warranty to two full years, but the value really comes from accidental damage coverage, and it's worth noting that the cost of this has gone up as well. The AppleCare+ coverage still allows for two instances of accidental damage, but the replacement fee is $99. That's still better than paying the full cost of a new screen or an entirely new device if you drop (or bend) your phone, but it's not necessarily cheap.
Carriers offer an array of insurance options, but even the lowest tiers all bump the monthly price of the installment plans up over the price of Apple's new plan. Buying that insurance will not only allow you to replace your phone if it's damaged, like Apple, but also if it's stolen or lost. You pay a lot more for this, though — the deductibles are usually $175 or $200, much higher than Apple's $99 replacement fee.
Apple's plan is cheaper than the comparable option offered by almost every major carrier, and you get an unlocked phone to boot. AppleCare+ won't cover your phone if it gets lost or is stolen, you won't pay as much to replace your phone when you inevitably drop it. If you're not concerned with insurance at all, it's probably worth your time to parse the payment plans from the carrier of your choice. But if you want the new iPhone, some sort of insurance, and don't want to sign a traditional two-year contract, Apple's new iPhone Upgrade Program looks like the best option around.
Update September 10th, 2015, 9:24AM: Added clarification that this comparison is about the 24-month installment plans.
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