As the Internet gawks at the sky-high $999 price of the glitzy new iPhone X, you would be excused for thinking: ‘When was the last time anyone paid full price for an iPhone anyway?’ For years, the leading mobile carriers allowed customers to upgrade to the new iPhone model for a far-reduced $199 fee, known as a subsidy.
But those ended for good in January of this year, when Verizon Wireless became the last major U.S. wireless carrier to stop offering this sweet deal. “Subsidizing had become an ugly word among the investment community,” Macquarie analyst Amy Yong told CNBC. As a result, no one is going to get the iPhone X for $199.
It was a slow burn: T-Mobile did away with the subsidies back in 2013. Then Sprint, and finally AT&T followed in 2015. Verizon stopped offering the subsidies to new customers in 2015, but was still allowing its existing customers to renew their expiring two-year contracts in return for a subsidy up until January 2017.
That means the new family of iPhones (8, 8 Plus, and X) are the first for which no one gets a subsidy. The glory days of the $199 iPhone are over.
That doesn’t mean Apple needs to worry about unit sales. Ramon Llamas, an analyst with research firm IDC, says he’s “fairly bullish” on the success of the iPhone X, despite its eye-popping price tag, because these days, “very few people want the No. 2 device. They want the No. 1. Apple has indicated that the X is what will dictate the future of their phones, and don’t you want to be on that path?”
To be sure, carriers are already offering a variety of deals, but there are fewer than before, and they are mostly rebates (as opposed to discounts at the time of purchase) and come with many restrictions.
T-Mobile is offering its customers “up to $300 off” the new iPhone, if you trade in an iPhone 6 or higher, but the credit is a discount on your T-Mobile phone bill, and it’s paid out over 24 months. (So you’d still pay full price for the iPhone 8 or iPhone X, but get a discounted service bill.) Verizon is also offering a $300 credit, with the same 24-month payout period, but only if you sign up for an Unlimited plan, and only if you trade in a “premium” model like iPhone 6S. Sprint is offering its customers half off a monthly leasing plan, but only on iPhone 8. AT&T is offering a buy-one-get-one-free deal on iPhone 8 and 8 Plus, but only for customers who subscribe to DirecTV, and add a second line of AT&T service, and stick with it for 24 months. (It’s no coincidence that all of these sound a lot like the original 2-year contracts, minus the best part, the $199 subsidies.)
And there are still those who might get the new iPhone from their employer, if they work at a company that provides a phone. But that portion is shrinking as well.
In 2016, of the 175 million smartphones shipped to the U.S., 12 million went to businesses and enterprises, according to IDC data. That’s 7%, down from 12% just a few years before. That could be part of an overall trend of employees using their own phone as their work phone, rather than toting a second, separate smartphone. “I think more companies are saying, ‘You’ve got your own smartphone? Okay, bring that in,'” says Llamas.
But just because everyone will have to pay full price for the new iPhone does not mean they will pay it all up front.
There are more monthly-payment options than ever before, both from carriers and from Apple, and Llamas says it’s actually leaving people happier with their current wireless provider. “The carriers have been incredibly transparent about their plans, and clear about how much you’ll pay per month,” he says. “It gets away from that entire thinking of, ‘Could this money have gone toward a mortgage payment?’ Now it’s just part of your monthly budget.”
Daniel Roberts is a writer at Yahoo Finance, covering tech and media. Follow him on Twitter at @readDanwrite.