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Ever since my dad brought home an...

What’s the best way of buying a phone today?

How did you buy your latest phone?...

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So, early last week I predicted that...

Buy an Xbox for $99 and $15/month… how long before I can get my MacBook Air this way?

For a long time I’ve been banging on about renting and leasing. WHen it comes to consumer technology, I rarely ever want to actually own it. Why bother? What is the point? Especially when there’s going to be another one along in 9 months. Or a few years.

I don’t want the management overhead.

A lot of people think I’m nuts.

That’s because they’re wedded to the old model of consumption that requires you to own, own, own.

I find it far more effective to be able to lease, hire or rent the use of technology, rather than have to mess around supporting and maintaining it.

We haven’t quite got there with the mobile industry. O2 is the only retailer that’s jumped properly into the market with their £55/month one-year agreement for the iPhone 4S. You simply pay the fee per month and that covers the lease of the device and your service plan. At the end of the 12 month agreement, you either give the phone back or you swap it for a new one. Love it. I don’t want to be left stuck holding an old phone that I need to then sell myself. I just want the utility.

Folk also think I’m nuts when I explain that I want to be able to get a MacBook Air on a pay-monthly arrangement. Most of the people in the mobile operators think I’m crazy. One or two actually get the concept.

Today’s news from Microsoft should get a few companies dusting off their product marketing plans. Microsoft is reported to be preparing to offer an Xbox 360 bundled with Kinect plus an Xbox Live Gold Account for $99 up front and $15 per month, based on a 2-year agreement.

VentureBeat has run the comparison numbers:

To purchase the same Xbox 360 + Kinect bundle now, you’d have to shell out $299, plus another $120 for a two-year Xbox Live Gold contract, for a total of $420. With the new bundle, you’d be paying $459 over two years — a difference that many consumers likely wouldn’t mind.

The net result? This new pricing proposal is likely to result in a dramatic shift in the console marketplace. If you were going to pay for the Xbox Live Gold account anyway, you might as well pick up the device for $99 and pay the $15/month. That’s a heck of a lot easier to swallow than $300 up front.

The subsidy model is completely familiar to most people in the West accustomed to getting their mobile device technology in this manner.

What then, for the rest of the consumer technology marketplace?

To put this in perspective, are you thinking about buying an iPad?

Right. Pretend you are. Assume for the moment that you really like the idea of getting a new iPad but that you’re rather seriously put off by the price?

How about getting the iPad for £49 up front and then £14.99 a month? That changes things doesn’t it? All of a sudden that’s eminently accessible. That’s just £3.20 a week. You could pay for it via your iTunes account billed to your credit card. Heck, that’s not far off the amount of money I pay for the Telegraph app every month.

How would the wider market cope with Apple, Sony, or other technology firms all of a sudden adopting the pay-per-month subsidy concept?

We’ve seen this model used by the mobile operators with iPads — indeed I’m still paying £25/month to Vodafone for my old iPad 2.

Imagine this model applied to SLR digital cameras or televisions or other consumer electronics?

I’d like to see what would happen to consumption if Apple all of a sudden introduced a subscription plan for all their products and services.

We’d be a step closer to my vision of a ‘lifestyle subscription’.

£59 per month gets you an iPhone and an iPad.

£89 gets you iPhone, iPad and MacBook Air.

£169 gets you iPhone, iPad, Apple TV and Mac Pro desktop. Add £49 per month for dual 28″ screens.

I’m obviously just making up those prices — I don’t think they’re necessarily realistic.

This type of model might very well be useful for some of the other consumer goods companies aiming to differentiate or distort the market for their benefit.

I’ll be watching this space!

Update: Here’s a video summarising the various opinions from around the web via Newsy:


  1. Throwing a wrinkle in this…

    Depending on the platform, leasing does make sense. But, if you are more apt to roll your own pieces, or need less platform stickiness, then you might want to make the call that you are literally leasing your entire computing experience out. Leasing the entire experience out means that you are only as valuable as the data you generate. That’s not exactly the kind of value system most want. Then again, if you want to be more than the data you generate, you have to create the value outside of that system.

    Fun thoughts.

  2. Take me through that in a bit more detail — does it need to be about data? Couldn’t it be a nice way of getting your product into the hands of more consumers at easily digestible price points?

  3. I am not sure I quite get what is new about this, is this not just Microsoft providing a financing option instead of letting various independents offer financing?
    In the same way, I don’t understand what your subscription model would achieve that is different than buying a device on finance?

  4. Its the difference between buying a phone from an operator in 60 seconds and buying a TV on finance from an electronics firm in 30-60 minutes after you’ve filled out 3 extensive forms.

  5. I think that what Ewan is implying is that the inclusion of live as part of the monthly package turns the commitment from a hardware equation to the purchase of a zero complication service, without the inclusion of live it would just be a financing option, but with this option you are offering a low barrier to entry solution, which includes everything (though a subscription gaming package would be the next logical step), This is perfect for the typical refusenik demographics, and to those people, what Ewan proposes about paying monthly for a holistic technology solution makes sense  

  6. I do sort of get that, certainly the retail experience is very important. But if I wanted financing I would probably just use my credit card, and from personal experience buying an unlocked phone with a credit card is a lot nicer than buying one with any kind of subscription setup.
    Now, if this included an automatic upgrade to the next model, should such a thing be launched, I could kind of see the point.

  7. I do my best 😉

    And I do agree with you point, it is amazing how democratising the contract system is. It would be based on personal experience and anecdotal eveidence, but I think one of the reasons women dominate smartphone engagement is because one can walk out of shop with a shiny new iPhone with no cash down and a spongy valuation of the hardware mixed up with the payment of telecoms services.

     In my mind, the next area that is ripe for this sort of low hassle shake up is “on demand” media services, but one would probably need critical mass of hardware solutions (like you are describing) for this to become viable 

  8. Putting $300 on your credit card vs $99 or $49 is a huge, huge difference for a lot of consumers. If you look at most of the iPhones in the UK, for example, I reckon that a VERY small percentage were purchased outright. Most people either don’t like the idea or can’t afford to spend £600 on a phone up front. It’s all about the perception.


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