Looks like the iPhone 7 is good enough to spur upgrades after all.
Despite some speculation ahead of Apple’s latest iPhone launch last week that minor changes to the device would result in lackluster sales, demand for the device at T-Mobile and Sprint is significantly outpacing that of its predecessors.
T-Mobile on Tuesday announced preorder sales of the iPhone 7 from Friday to Monday were nearly four times higher than the iPhone 6. The Un-carrier said the device also shattered pre-registration records, topping both the iPhone 6 and 6s, and set a single say sales record on Friday for any smartphone ever in T-Mobile US history.
“iPhone 7 is the biggest pre-order in T-Mobile’s history, and that says a lot about our momentum and the excitement customers have for iPhone 7 and iPhone 7 Plus,” T-Mobile CEO John Legere said in a statement. “Q3 was already off to an incredible start, and when you add a kick-ass phone to T-Mobile ONE and top it off with the nation’s fastest LTE network, Americans can clearly see that it’s the best time ever to switch to the Un-carrier!”
In follow up comments on Twitter, Legere said the Un-carrier is also seeing significant porting activity as well. Overall porting ratios from competitors Verizon, AT&T and Sprint in the third quarter so far have surpassed those from the first and second quarters, he said.
But T-Mobile isn’t the only one seeing success with the iPhone 7.
Sprint on Tuesday also gave a glimpse into its success with the iPhone 7, reporting preorder sales of the iPhone 7 and iPhone 7 Plus in the first three days of availability are up 375 percent over preorder sales of last year’s iPhone 6s.
Verizon did not immediately respond to a request for comment about its iPhone 7 sales figures. AT&T declined to comment.
Apple stocks were up around 3 percent Tuesday morning on the news.
As of early August, investment firm UBS forecast iPhone shipments would total 45 million in the September quarter and 72 million in the December quarter. UBS said it was expecting 222 million iPhone units to be sold in fiscal year 2017.
Comeback of the two-year agreement (sort of)
The record figures come amid a flurry of trade-in offers from U.S. carriers.
T-Mobile, AT&T, Verizon and Sprint are all offering customers a free 32 GB iPhone 7 when they trade in a paid-off iPhone 6 or 6s and agree to a 24-month finance agreement. The devices, the carriers said, will be free after $650 in trade-in credits are applied to their accounts over the course of the two year agreement.
Recon Analytics’ Roger Enter said the offers are strikingly similar to the carriers’ old subsidy plans that required customers to sign two-year service contracts in return for a free or discounted device.
The resurgence of this two-year model is interesting given the fact that most carriers – with the exception of Sprint – have firmly shifted away from the two-year contract model. Instead, carriers have been offering a mix of equipment installment plans (EIP) and lease agreements to split up service and device costs and spread the latter payments over a longer period of time. The difference between EIP and leasing, of course, is that customers on EIP own the device at the end of the payment term where leasers don’t.
Just because two-year service agreements are a thing of the past, though, doesn’t mean customers aren’t bound by a contract. Many EIP and leasing plans include 12 or 24-month payment commitments. Though these contracts can be broken, customers end up being responsible to pay the remainder of their device cost before they can leave – which can be a hefty sum for a device like the iPhone 7.
Though U.S. carriers have sought to battle this impediment with $650 pay-off offers for switchers, consumer groups have argued its important wireless customers know exactly what they’re signing up for in the first place.
Back in December, consumer groups led by Change to Win filed a complaint with the Consumer Financial Protection Bureau to investigate T-Mobile for alleged deceptive billing practices. The Un-carrier, the groups said, was misleading consumers with its “no contract” claims despite the fact that many month-to-month services are tied to two-year equipment financing.
“We are concerned that, without regulatory intervention, consumers will continue to enter into service agreements expecting a no obligation, month-to-month arrangement only to find that they are saddled with hefty equipment-related expenses if they terminate service,” the complaint read. “As the wireless market evolves, consumers need regulators to ensure each carrier is providing accurate and straight-forward disclosures in its advertising.”
Analysts at the time noted carriers could avoid such confusion by being more direct about what’s entailed in their device offers. The latest iPhone 7 offers, though, still relegate the 24-month clause to the fine print.
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