Photo: Marc Siry via Plixi
All the fears about carriers cutting subsidies for the iPhone in the near future are completely overblown, according to a top Apple analyst.Gene Munster of Piper Jaffray writes in a new research note that the current carrier subsidy model will remain in place for at least another 2-3 years.
Munster outlines three big factors behind this prediction:
- The iPhone has the lowest churn rate of any mobile device, meaning customers are less likely to abandon their service with the carrier.
- There is incredibly high demand for the iPhone, which makes it a valuable marketing tool for carriers to attract more customers.
- If one carrier cuts subsidies, another one of the carriers would likely use it as leverage to attract more customers given the high demand for the iPhone.
Even so, Munster admits that analysts and investors will continue freaking out about the issue for a while.
“We do not expect the subsidy question to go away, but are confident that subsidies will remain a part of iPhone sales in the coming years,” Munster writes in the note.
All that said, it’s important to note that what Munster is talking about here isn’t the real issue with carriers and the iPhone.
The original issue, which was first brought up by BTIG’s Walter Piecyk, is that carriers are stretching out upgrade programs and making them more expensive. Previously, you could upgrade every year or so. Now, it’s every two years, and there’s a slight penalty for upgrading.
This is something Piecyk believes will affect iPhone sales.