Okay, I get it. There’s a shiny gadget in the display window, and its price tag suddenly falls from $100 to nearly nothing. Your heart skips a beat, your eyes widen and you reach into your pocket for some loose change to snap up the iPhone 5C, which just got slashed to 97 cents at Walmart.
Not so fast, chump.
This is just a trick to get you to sign on the dotted line and commit to two years of living in the past. The last thing you want to do in late August is lock yourself into a two-year phone contract with last year’s model. But that’s exactly what you’ll be doing if you give in to Walmart’s illusory “deal.”
To be fair, Walmart is far from the only retailer trying to trap you into a mobile phone contract with low prices. It’s just one of the most pervasive. Walmart, along with Costco and Target, account for 12% of all cellphone sales in the U.S. Walmart is particularly popular with families, which is why Sprint recently chose the retailer as the launchpad for its family-oriented Custom plans.
A free (or nearly free) iPhone — one of the current models — sounds like a great deal, and it would be… if this were 2013. Or even early 2014. But right now, you’re way better off skipping Walmart’s cheapo iPhone. Here’s why:
Yep, 97 cents is a great deal. You know what’s a better deal? No cents. You can buy the iPhone 5C right now — with no contract — from T-Mobile for $0 down. In fact, you can do the same at AT&T, Verizon and Sprint under their various programs.
The big catch? To get those deals, you have to pay for the phone with incremental payments every month, which are usually about $25 to $35. But at least those payments stop after two years, whereas a new contract — which the Walmart deal requires — would mean your phone’s true cost ($549 for the iPhone 5C) is built into the rates you pay, which don’t automatically cease when the contract expires.
Either way, they get your money. And if you really want the iPhone 5C with a contract, Sprint actually already offers it for $0. At least you’ll save nearly a buck.
The reason the iPhone 5C exists at all is because Apple wanted to offer the previous year’s model (as it always does) as a “step-down” version of the iPhone for budget-conscious consumers, but it also wanted to build it cheaper so it would still produce decent profit margins.
It might not have been the most impactful part of Apple’s iPhone strategy, but it did succeed in packaging “last year’s tech” — namely the iPhone 5 — into something shiny and new. The technology in the iPhone 5C is getting gray, though, and anyone who “upgrades” to the model now will have a phone that’s two years behind the flagship phones of today.
You may be thinking “I don’t need the latest and greatest,” and you’re right, you don’t. But you also don’t want to be too far behind either, and two years is a dog’s age in mobile. Both platform makers and app developers design for the most recent hardware, and adapt their experiences for older models.
Just ask anyone running iOS 7 on an iPhone 4 what the experience is like. Even the iPhone 4S struggles to deal with an iOS 7 world, and that, in terms of the “tech gap,” is basically the equivalent of what you’ll have if you settle for the iPhone 5C now. For two years.
If you haven’t heard, Apple is planning an event for early September. Even absent the report about the unconfirmed Sept. 9 event, Apple is always poised to unveil a new iPhone in the fall. When the new models arrive, it changes pricing for the previous models.
The Walmart discount is really just a harbinger of what’s going to happen to all iPhones right then. When the iPhone 6, iPhone 6L or whatever the new models are called get here, you won’t be able to throw a Bluetooth earpiece in a wireless store without hitting a discounted iPhone 5C. Apple and its retail partners need to clear out inventory to make room for the new models, and the most surefire way to do that is to cut prices.
If you’re dead-set on signing a wireless contract to buy a two-year-old phone (see No. 2 above) for no money down, then just hold out a couple of weeks and you won’t need to do it at Walmart.
Wireless customers in the U.S. are getting smarter. They’re much more aware than in previous years of the true cost of the smartphones they buy, which are typically even more than tablets (with much larger screens).
T-Mobile sparked a quiet revolution in 2013 when it threw out wireless contracts altogether. Instead the company lets customers buy phones — for their true cost — on installment plans. The strategy is working. T-Mobile has gained subscribers in every quarter since the change and other carriers quickly followed with payment-plan options of their own.
Signing a contract really won’t save you any money, and it’ll instantly limit your ability to upgrade your phone — not good for a piece of mobile tech that’s, again, already two years old. Be smart: If you’re going to sign a wireless contract, which also signs away your ability to upgrade for subsidized prices, make sure you’re getting a phone that’s state-of-the-art.
If you really want to buy a cheaper phone with older tech, better to opt for one of the early-upgrade programs now offered by carriers such as T-Mobile Jump, AT&T Next or Verizon Edge. At least then, if you want out, you’ll have the option (although you’ll have to finish paying off the first phone, of course).