TECH

Apple Could Trap You Forever With Its New 'Upgrade Program'

The new monthly payment plan seems incredibly tempting -- but let us talk you out of it.
Sweet manna from the gods.
Sweet manna from the gods.

It’s not enough that Apple wants us to buy a new phone every year. Now it seems to want a little bit of our soul, too.

Apple's updated batch of iPhones will hit shelves next week. They're expected to sell like hotcakes, because they always do, and if you want to get your hands on one, there are more options than ever. Carriers like Verizon and AT&T are offering installment plans, as well as discounts to people who opt into new contracts -- and, in a new twist, Apple's hoping to rope consumers into a little plot of its own. 

The tech giant -- which could sell a potato coated in "rose gold" if it wanted to -- has introduced a new "upgrade program" that will allow people to pay for its coveted iPhones on a monthly basis for two years. For the most basic, 16GB device, payment plans start at $32.41 a month. After 12 months, you can upgrade to a new iPhone, which starts the whole monthly payment process over again. 

To be clear, you'll still need to pay for monthly service from a wireless company if you sign up for this program. Apple's providing the hardware, not the data plan.

Our friends at Re/code have ably broken down the many ways to buy a new iPhone. But allow us to save you the anguish of looking into Apple's upgrade plan yourself: It's a bad idea, though perhaps not for the reason you'd expect. 

If you opt for the upgrade plan, you'll have a hard time ever breaking out of Apple's world. Complete the full 24-month payment cycle, and you're stuck with an outdated phone. Upgrade every 12 months, and you'll never stop owing Apple money for iPhones. And on top of this, you also must pay Verizon or AT&T or whomever each month.

On the face of it, Apple isn't giving you a bad deal. If you get a new 16GB iPhone 6S through Apple's upgrade plan, you'll pay over the course of two years a total of $777.84, possibly more, depending on sales tax -- and that total includes the cost of Apple Care+ warranty service. If you buy the same phone for a flat fee, it's $649, with the option to add warranty service for $129.

The real problem with the upgrade plan has more to do with the temptation to get a new iPhone each year.

Apple is expert at making its premium devices seem like old garbage very quickly: There's always something new and shiny around the corner that starts to peek around juuuuust when your phone's software seems a little sluggish or your memory a bit too full.  

Everyone knows someone who's proud of their years-old iPhone, but if you're paying a monthly plan that explicitly allows for an annual upgrade, you'll naturally take advantage. And if you've started with a 16GB phone, there's a good chance you'll want one with more storage space when you upgrade. The next level up will probably cost a few dollars more per month. We can't know for sure what pricing or storage will be on next year's models -- it's likely that Apple will increase the minimum storage size of the iPhone -- but let's just take a look at this year's offerings, for the sake of argument.

OK: You sign up for Apple's upgrade plan and select an iPhone 6S. You make the first 12 months of payments at $32.41 a pop -- that's $388.92 so far. Then, Apple rolls out the iPhone 7 or whatever -- let's say it's ostensibly the exact same device as the 6S with a few more bells and whistles. You decide to trade in your phone for the nicer model and also decide, hey, my old device got a little slow toward the end, I'm going to go for one with larger storage. 

For the next level of storage, 64GB, you'll pay $36.58 a month. (You'll no longer be paying for the first iPhone, because you've traded it in for the upgrade.) After 12 months at the new rate, you've paid another $438.96.

So, 24 months after you got the iPhone 6S, you've paid a total of $827.88 for the privilege of having an iPhone that you never actually owned, just borrowed from Apple. That's $388.92 for a year of iPhone 6S and $438.96 for a year of iPhone 7, and you still have a year left before you'll pay off the new phone.

If you hold on strong and pay down that second phone without upgrading to the iPhone 8 the next year, then, congratulations, you're the owner of an outdated iPhone that you paid a total of $1,266.84 for.

Theoretically, you could just keep the cycle going for your entire life and rent iPhones forever for $30-something a month, plus whatever your carrier charges you for wireless service.  

If you complete the full 24-month payment cycle, you're stuck with an outdated phone. If you upgrade every 12 months, you'll never stop owing Apple money for iPhones.

As analyst Jan Dawson pointed out, this is a really great arrangement for Apple. The company gets to cut out the middle man and work directly with the customer. Apple makes a little extra money because of the built-in cost of Apple Care+, which most people will never take advantage of. And, it gets its devices back: Since you have to hand in the old handset to get the new iPhone, Apple can shove those back onto the market as refurbished devices and vastly increase the revenue-generating potential of each phone it produces.

You, the consumer, will not win. It'll seem great to have an awesome new iPhone for a manageable monthly fee, but it's a hamster wheel. Once a year, you will be tempted by the corporation's new device. You'll be accustomed to paying a monthly fee for your phone anyway, so you won't think twice before turning in your old iPhone to get a new one, restarting the 24-month cycle.

You will never consider alternative options on the marketplace. Why would you? New smartphones from competitors like Android might cost $400, say, and you're content paying $30-whatever a month. You'll happily ignore the sunk cost of the hundreds you've poured into iPhones over the course of months and imagine that a base entry price of $400 too high.

You, the consumer, will not win.

Or maybe you do wise up one day, but you're still stuck in the middle of your 24-month contract with Apple. If you've paid the existing monthly fee of $32.41 for 14 months, tough luck: You'll need to pay off the rest. You're not really "leasing" anything in reality -- you're paying back a loan. Then, because you've shredded hundreds more that could've been used on a competing smartphone, you'll be stuck with an outdated iPhone until you can scrounge up the cash for something else.

Listen: Apple makes good phones, and it's far from the only technology corporation looking to maximize profits in the telecom industry. You could do far worse than buying an iPhone.

But you want to be behind as few locked doors as possible. It's bad enough that so many of us opt into the concrete shoes of wireless service contracts. Now we want to sign our cash away to device-makers on a monthly basis? If you can afford to purchase an iPhone outright from Apple or at a discount from your carrier, that's probably the way to go. If not, consider an alternative.

Make your own choices, but do so wisely. 

Alexandra Ma and Lorenzo Ligato contributed reporting.

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Damon Beres covers consumer technology, video games and the many ways humans interact with their devices. He is based in New York. You can contact him at damon.beres@huffingtonpost.com or on Twitter: @dlberes.

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