These Free iPhone 7 Promos Are Ending This Weekend
The hot offers from wireless carriers for a free iPhone 7 are coming to an end. AT&T said on Friday that it would end its promotion on September 25, the same day T-Mobile has previously said its own promo would end. Verizon and Sprint haven’t set end dates yet, but both stipulated their promotions would be only for a limited time.
Wall Street wasn’t expecting much from Apple’s iPhone 7 launch, but the smartphone got a surprise boost when the big four wireless carriers decided to get back into the subsidy game.
Starting with T-Mobile, all four carriers offered a free iPhone 7 32 GB model with the trade-in of an older iPhone 6 or 6S model. Customers who got a free iPhone also had to stay for two years or pay back a proportional amount of the $650 price tag. After accounting for the value of the trade in, the carriers were subsidizing the iPhone by $250 to $400, analysts said.
The enticement of a “free” iPhone boosted sales significantly at some carriers. T-Mobile (TMUS) reported record demand for the iPhone 7—almost four times higher than in 2014 when the iPhone 6 was setting records. Sprint (S) said it experienced a fourfold to fivefold increase in orders from last year’s iPhone 6S. And AT&T (T) said said it saw a “real improvement” in sales that exceeded initial expectations. Verizon (VZ) has said only that it saw higher sales than year.
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Apple’s (AAPL) stock price has gotten a nice bounce from the carriers’ promotions, but it remains to be seen if sales will continue to be strong without the subsidies. Typically, iPhone sales are strongest when Apple revamps the phone’s exterior appearance. The iPhone 7 is almost identical to last year’s model, though it is available in two new colors and has a host of internal improvements.
“The question is when those promos end…does that continue,” Verizon CFO Fran Shammo mused at an investor conference this week. “I don’t know the answer to that yet, and I still believe that volume will be similar to ’15.”
Still, the consensus in the industry seems to be that the promotions convinced some customers to upgrade who otherwise would have waited until next year. “Given that Apple has a massive base of iPhone users, they just need a small fraction to upgrade to make a decent quarter,” says Chetan Sharma, a wireless industry consultant.
As happens with most iPhone launches, Apple quickly sold out of iPhone 7 models, pushing deliveries out two to six weeks and possibly limiting the impact of the carriers’ promotions. “With some of these promotions expiring, it’s clear that they’re going to affect the share of sales by carrier a lot more than the actual number of sales,” says Jan Dawson, chief analyst at Jackdaw Research. “It certainly doesn’t hurt Apple that so many of the promotions at this time of year are iPhone-centric, but it’s the promotions later in the fall and into the winter that have the potential to move the overall iPhone sales needle more than the ones at launch time.”