MG Siegler on The $1,500 iPhone, the next (last?) stop on the march towards 'Apple Prime':

It just makes sense. I do believe this year may be an aforementioned test of Apple’s customers willingness to pay insanely high prices for a phone. I can’t see the trend continuing with the $2,000 iPhone. But actually, I can! It will just be obfuscated by monthly payments. Just as it used to be in the days of carrier subsidies! But this time, such payments will be going directly to Apple.

Again, this is already happening for those of us on the iPhone Upgrade Program. And it means there is no $1,500 iPhone, it’s more like a $60/month iPhone. And you can easily talk yourself into it because thanks to being eligible for a yearly upgrade to the latest iPhone, you’re never paying full price for a device. Instead, if you do the math (which most won’t), you’re paying roughly half the cost for the top-of-the-line model over that year.

Of course, you’re also paying Apple in perpetuity! And this monthly bill is only going to go up as they bake in AppleCare (which they do), theft protection (new this year!), and eventually all sorts of other goodies: iCloud storage, Apple Music, Apple Television (the service, not the box), etc.

This is how Apple truly becomes a services business. And it’s happening in front of our very eyes.

This is exactly what makes Amazon Prime so successful — start with a killer service, charge a monthly fee, constantly add new value and perks to make it impossible for subscribers to leave, and slowly raise the price.

I can absolutely see Apple working towards this.

I’m not sure when Apple realized and started executing upon this gradual price increase strategy. My best guess is just after 2011, when the top-of-the-line price started inching upwards again. Perhaps (almost certainly?) not coincidentally, this was the same year they let carriers subsidize old models down to $0. Apple let the lowest iPhone hit the bottom in order to set the top-of-the-line on a trajectory towards the stratosphere.

And it worked, rather beautifully. Now, I believe, the $1,500 iPhone offers a glimpse into Apple’s next phase. The $99/month, forever, iPhone.

iPhone forever.

When you email Tim Cook as a loyal but disappointed customer…and his people make things right by reserving you the rarest, least available model on the market.

Hello, Jet Black Plus 256. Wasn't expecting you until November.

Hey Tim,

Loyal customer of 10 years and iPhone Upgrade Program customer here. Last night I tried pre-ordering my 7th iPhone under the iPhone Upgrade Program...and now I feel cheated.

Not getting it on launch day doesn't bother me; I completely understand supply & demand.

But what bothers me is that once reservation units ran out, the site/app merely said "try again on the 17th at 8am" and offered ZERO options. I was led into a dead end.

Meanwhile, customers who are not in the Upgrade Program were able to get their orders in and get a shipping ETA. Many in Oct/Nov, but they at least got their orders in.

As an iPhone Upgrade Program customer, I feel like I had a significant disadvantage compared to non-Upgrade Program customers. Isn't that backwards? Shouldn't the loyal customers — especially customers who are committing directly to Apple instead of their carriers — feel rewarded for their loyalty?

I feel like a reasonable solution would have been:

• let Upgrade Program customers get their pre-orders into the system. Orders ship to the store, even if that's not until Oct/Nov.
• when a customer's phone arrives, notify by email, let them set up an appointment.
• finish transaction in store.

This way, at least your most loyal customers have an order attached to their name in the system. The backordered ship date isn't the problem...it's the feeling that we ended last night COMPLETELY empty-handed while less loyal customers continue to get their orders in.

I hope you consider solving this problem.

For me personally, I've been recommending all my friends and family to get on the iPhone Upgrade Program...and now I have to explain to them why we came up empty-handed last night.

-Mel

Update: Tim Cook's people called me the next day and made things right.