T-Mobile will at long last offer the Apple iPhone, but does the carrier's new math add up?
Apple iPhone 5S: The Hot Rumors
(click image for slideshow)
With much fanfare and hullaballoo, T-Mobile USA CEO John Legere announced that the company will finally offer Apple's smartphone. The iPhone 5 goes on sale from T-Mobile April 12, but customers can sign up starting April 5. T-Mobile is advertising the iPhone 5 for $99, but that's not necessarily what you'll pay.
The $99 is actually a down payment on the iPhone 5. Thereafter, T-Mobile's iPhone 5 customers will make monthly payments of $20 for 24 months until the device is paid off. Between the down payment and the monthly installments, the total amounts to $580 -- that's about $70 less than the iPhone 5's raw $649 selling price.
As soon as the iPhone 5 is paid off, you'll own the device, whether or not you stick with T-Mobile USA. Even better, once you own the device, T-Mobile USA will unlock it so it can be used on competing networks. (Yes, new phones will be locked to T-Mobile's network.)
The beauty of T-Mobile's new model is that there are no contracts. Customers can leave at any time. Legere even said, "If we suck for a month, leave! Go somewhere else!" Of course, he also said T-Mobile hopes that customers will love its new service enough that they will stay.
Asked what happens if a customer leaves T-Mobile after having made only a few payments, T-Mobile didn't really have a good answer. Instead, Legere said the payoff amount will be based on what's left of the remaining payments and the fair market value for the iPhone 5 (if the customer wants to turn the device in). T-Mobile's wishy-washy answer is somewhat concerning.
There are no penalties, said T-Mobile, for accelerating payments or paying off the device in full instead of making the $20 monthly payments. T-Mobile claimed it is offering this financing option with no interest. In fact, its $580 total price actually saves consumers money compared to buying the phone outright from Apple.
Beyond the down payment and the monthly $20 fee, customers will of course need a service plan for their iPhone 5. The cheapest plan costs $50 per month and includes unlimited voice, unlimited messaging and 500MB of data. Want more data? Pay more.
That means an iPhone 5 and T-Mobile's cheapest plan amount to $70 per month together. Is that a good deal? It really depends on how you think about it.
For starters, T-Mobile's iPhone 5 is (thankfully) optimized for its network. That means you'll get LTE 4G support in the 1700MHz band, as well as HSPA+ 3G in the 1700 and 1900MHz bands. T-Mobile's iPhone will be the only one that offers HD Voice (higher-quality phone calls). Beyond these customizations, T-Mobile's iPhone 5 is the same as every other iPhone 5. The other carriers charge from $199 to $399 for the iPhone 5, depending on storage, at contract inception.
The key benefit for T-Mobile customers here is the lack of a contract. Unhappy T-Mo customers can walk away at any time. That's a powerful motivator for T-Mobile, which needs to earn its customers' business each and every day. Other carriers lock customers into two-year contracts, which prevents them from leaving. The no-contract option is certainly appealing. Whether or not T-Mobile's services can live up to the demands from iPhone 5 customers is another matter entirely.
Attend Interop Las Vegas May 6-10 and learn the emerging trends in information risk management and security. Use Priority Code MPIWK by March 22 to save an additional $200 off the early bird discount on All Access and Conference Passes. Join us in Las Vegas for access to 125+ workshops and conference classes, 300+ exhibiting companies, and the latest technology. Register today!
Building A Mobile Business MindsetAmong 688 respondents, 46% have deployed mobile apps, with an additional 24% planning to in the next year. Soon all apps will look like mobile apps ľ and it's past time for those with no plans to get cracking.
Join us for a roundup of the top stories on InformationWeek.com for the week of April 24, 2016. We'll be talking with the InformationWeek.com editors and correspondents who brought you the top stories of the week!