The 5G iPhone is reigniting the subsidy wars, with wireless companies offering deals to entice consumers to upgrade up to the iPhone 12. But this won't necessarily be good for mobile carriers: 'You still have to generate free-cash flow.'
Apple Inc. and consumers are set to win as the wireless industry offers its most aggressive launch-day smartphone subsidies in at least five years, but the steep discounts may wind up hurting the carriers.
Verizon Communications Inc.’s VZ, -0.46% best deal amounts to an $800 subsidy, Piecyk said, but it’s restricted to new subscribers on unlimited plans. T-Mobile US Inc. TMUS, -1.17% is offering half off the iPhone 12 Pro through bill credits, or $500 off any iPhone 12 device, to those who trade in their phones. The company has an offer of $850 off for those who add a line and trade in a phone.
It remains to be seen whether these promotions could help drive a true “supercycle” for Apple, though, since the U.S. represents less than half of Apple’s total sales. The company’s only true supercycle, in Piecyk’s view, came when Apple expanded its screen-size offerings during its iPhone 6 launch, and that dynamic exists again because there’s a chance that the new iPhone 12 Mini “really appeals to markets that have wanted that” smaller form factor, he said.
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