Apple sees success in iPhone Upgrade Program, plans to introduce 4-inch iPhone

Financing iPhones seems to be doing Apple good but not for bigger mobile carriers. The new iPhone Upgrade Program has started driving users to cheaper, smaller providers like T-Mobile and Sprint. Furthermore, the company is not stopping in its iPhone line as reports about a new 4-inch phone in the works surfaced.

T-Mobile posted its best iPhone quarter in history, thanks to a surge in store sales plus direct purchases from Apple. Similar to what analysts predicted, a similar outcome in Sprint's quarterly results show that Apple's entry into iPhone financing is beneficial to cheaper carriers.

Under Apple's iPhone Upgrade Program, people can buy handsets for a low as US$32 [AU$44.80] a month regardless of the network. According to Bloomberg, this threatens to wipe out wireless carriers because it removes carrier loyalty. Consumers are now down to cost comparisons, which benefit T-Mobile and Sprint as opposed to Verizon and AT&T.

Separating carriers and direct manufacturers are bad for mobile network providers explained Kevin Smithen, an analyst with Macquarie Securities USA Inc. Once consumers decide to buy from Apple and get an unlocked device, they already chose not to get a carrier upgrade. T-Mobile, on the other hand, expressed its delight on the turn of events.

“We love it,” Bloomberg quoted Mike Sievert, T-Mobile’s chief operating officer. “It is interesting. It’s simplistic. It brings consumers more options and it’s been a benefit to us.”

Carriers may have to brace for more iPhone orders or shifts as the company is reportedly working on a 4-inch iPhone to be released next year. According to KGI Securities analyst Ming-Chi Kuo -- who has a proven track record on upcoming iPhone products -- Apple will be releasing a 4-inch iPhone much like the iPhone 5s.

"As there is still demand for a 4-inch iPhone, we believe Apple will upgrade this product line. Because the iPhone 5s is more popular than the iPhone 5c, we think Apple is likely to launch an upgraded iPhone 5s. We predict Apple will mass-produce this new 4-inch iPhone in 1H16 with metal casings. In order to make the current iOS 9 or next-generation iOS 10 run smoothly, Apple may adopt an A9 chip for this new phone." Kuo said in his note (via MacRumors). He also suggested that the new iPhone will not feature 3D Touch support so it will be separated from the iPhone 6s and 6s Plus. Expected sales are around 20-30 million units until the end of 2016.

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