The Apple Upgrade Situation

The final measure of any financial negotiation is the feeling of whether or not you got a “deal”.

That prior sentence… makes no sense.

I wrote “measure,” and then six words later I wrote “feeling”. A feeling is never a measure, but yet, when you hand over your hard-earned money to buy a thing, you’ll feel better because you believe the value received is higher than the dollars paid.

Too abstract. Here’s a good example:

I have felt since it was announced that the Apple iPhone Upgrade Program has not just been a deal, but a steal. The specifics:

You apply for a loan for a full-price iPhone at 0%.

If approved, your payments are split over 24 months.

Pay for 24 months, and the phone is yours.

That was just the deal; the steal was that it was low effort every single year to get a new phone. I’d re-up for a new phone, and Apple would forgive the remaining payments of the loan because I’d signed up for another 24 months. Oh, and bonus, AppleCare was included, which was a total steal because I hate iPhone cases (iPhones are designed to be felt) and, uh, also I have been known to drop my phone.

Felt fair. The Apple bet was that users would embrace the original plan, were going to re-up regularly, and Apple would refurb the phone on a strong used market. That bet ended on a Tuesday. Apple retired the Upgrade Program and replaced it with Apple Upgrade: a Klarna-financed lease covering iPhones, Watches, iPads, and Macs. The loan became a lease. And it feels different.

Follow the AppleCare Money

At first glance, the new plan looks cheaper. The original plan: one year of iPhone 17 Pro (256GB, $1,099 sticker) was ~$57/month. 12 payments, trade-in, restart: ~$684 for the year. The new one, same phone: $45.99/month on the 12-month lease: $552 for the year.

But wait! The first and most important change to the new plan is that AppleCare is no longer included. Adding it back to this phone at $13.99/month: $720 for the year.

But hold it! You can pay for AppleCare annually at $139.99, which brings the year to $692 — eight dollars from the original plan.

But wait once more! You have AppleCare One? Well, good news, your new iPhone can ride along in a $5.99/month slot, bringing us to $624 for the year. In fact, and illuminatingly so, the only way to get the good price on iPhone-plus-AppleCare is to get three pieces of hardware on the AppleCare One plan, which means having three pieces of hardware.

This might sound reasonable until you think about the number of times I’ve never had the opportunity to drop my Mac Studio. For all Mac hardware in general, there was that one time Rands Jr. somehow cracked her MacBook screen. That one time — in a couple of decades.

AppleCare is insurance. Like all insurance, you pay for protection from expensive, but hopefully unlikely disasters. In the event of the unlikely, you don’t pay. My issue with this approach is it appears Apple is removing AppleCare from the upgrade plan and herding folks towards AppleCare One because margins on insurance are sweet — like 2x the margins on hardware. I already pay Apple insurance. It’s not called insurance; it’s called “incredibly high quality hardware.” I gleefully pay Apple a premium not just because of its cutting-edge design, but also exemplary quality. With Dell, I pay for the insurance because the motherboard on my fancy Alienware gaming PC has already failed once.

It Still Feels Like a Deal, Not a Steal

When I buy a ticket at United, just before I click purchase, there is a must-acknowledge box I am required to read. It is a light-fear-inducing reminder that “Stuff changes when you are flying. You never know, but… maybe plop down a couple of hundred dollars because, well, you never know and we know better so maybe yeah, pay us money, and we’ll make it ok.”

Never in the history of ever have I done this. Yes, in the middle of winter when travel plans are truly up in the air, I think about it, but mostly… gross. This is a business trying to eke out high-margin dollars just before the sale when you are most worried about the value of your purchase.

There is genuine value in AppleCare, and I’ve considered AppleCare One because the Rands house has a lot of hardware, but the more I stare at the new plan, the more I feel a little gross.

I’ll stick with the plan for the phone along with additional AppleCare (not AppleCare One) because, remember, it’s whether or not I feel I got a deal. The primary intangible is that Apple is quite good at operations. The process of re-upping for the new phone has historically been trivial.

After the new phone has been announced, click a couple of things in the Store app, and you’re done.

New phone arrives promptly along with a pre-labeled return box for your old phone.

Drop that box off at FedEx. And done.

New phone sitting at the door. Almost like magic. Almost.

The Apple Upgrade Situation
the loan became a lease

Apple retired the decade-old iPhone Upgrade Program for a Klarna-financed lease. The monthly price dropped; the AppleCare money moved. Follow it.

Lots to digest here. I’m here for you. Read the Grumbles-infused analysis. A well-sourced scoreboard of who won and who didn’t.