Philip Elmer-DeWitt writing for Fortune:
What they couldn’t foresee was whether Apple’s customers would see the benefits to the buyer. Piper Jaffray’s Gene Munster, for example, predicted that 15% of new iPhone customers would opt for what is, in effect, a 24-month lease.
[…]
For 24 relatively low monthly payments—anywhere from $32.41 to $44.91—customers get AppleCare+ phone support/damage insurance (a $11/month value) and the option to trade up to an iPhone 7 (or whatever it’s called) a year from now.
It’s not so much a lease as a financed purchase. After 24 months, you’ve fully paid for the iPhone and the AppleCare+ warranty. If you choose to upgrade after a year, you’ve only paid for half of the iPhone, and its value has only dropped by about half, so that’s a wash.
The upshot of the Apple purchase program is that when you upgrade after a year, the AppleCare+ resets and applies for 2 years to the new phone, so you get that extra year of coverage for free. However, you’ll only enjoy that extra year when you stop the Apple purchase plan, such that you’re no longer paying Apple, but you’re still enjoying that extra year of AppleCare+.