Figure 1: An iPhone, every year, forever! But is it worth it?
FOREVER? - Globe Telecom has recently announced a new postpaid plan for iPhone-loving subscribers. You can trade-in your old iPhone every year for the latest model, provided that you abide by a lock-in period, of course. The question is: are you getting some benefit or do you just ‘pay for the phone’ with the plan payments?
Globe has just launched a new postpaid plan for those who want the latest iPhone every year - the iPhone Forever Plan. Basically, if you allow yourself to be locked-in to a certain plan for a 2-year period, you get a free iPhone now, and after a year, you get to trade the phone for the newer model without charge. More expensive plans get the higher-end configurations. The contract period does not extend when you trade in the phone. Yugatech provides a clear summary for those interested.
However, whenever something like this comes out, the question that pops up in everyone’s minds is…
Is it worth it?
Well, using the schedule of cash-out and payments, as well as the value of benefits and phones received, we can compute how much you’ll save under the plan; but first, I’d like to point out the assumptions:
- Full use of consumable amounts - I assume that if you’re going to get a plan, you’re planning to use all of it. Any unused consumable amount counts against potential savings from the plan.
- Use of renewal option - I use a 24-month period with a renewal exercised after 12 months.
- Alternative investment rate - To discount the amounts, I used the 2013 BSP long-term time deposit rate to proxy for the cost of money.
- Resale Value after a year - As reported by TechCrunch, iPhones fetch around 63% of their original price after one year.
Using these facts, the results are as follows (detailed computations are at the end of the article):