That iPhone May Not Cost You $1,000: A 'Sticky Ecosystem' Is A Boon For Cell Phone Carriers

Apple Inc. AAPL recently released its latest iPhone 14 models and Bank of America analyst Wamsi Mohan said Wednesday that carrier promotions are making the devices more affordable than shoppers may expect in the inflationary environment.

Trade-Ins Bullish For Apple: Mohan said major carriers are bundling iPhone financing with telecom services, as well as spreading out the cost of a new iPhone over 24 or even 36 monthly payments.

Related Link: Apple Launches iPhone 14, High-End Apple Watch, Emergency Satellite Capabilities And More: What Investors Need To Know

Mohan said trade-in incentives for older iPhones could also be good news for Apple. Carriers are offering up to $800 in trade-in credit for older model iPhones, but only for models that are between two and four years old. If iPhone users want to maximize the trade-in value for their phones, they may be driven to upgrade within this narrow window, shortening the traditional iPhone upgrade cycle.

Mohan said early iPhone 14 pre-order trends are encouraging.

"Although Apple increased iPhone prices in some regions, early pre-order trends indicate shipment times for the Pro models are stretched out vs. last year," Mohan said.

Related Link: Apple To Contest Brazil's Ban of iPhone Without Charger As It Braces To Launch iPhone 14

What Carriers Are Offering: Carriers' iPhone promotions may also be good news for the carriers themselves. Mohan said customers are required to enroll in an unlimited data plan and the phone credit is applied in equal amounts over the term of the installment agreement. Carriers may also require users to switch to more expensive plans.

Verizon Communications Inc. VZ is currently offering an $800 iPhone 14 credit for trading in an iPhone XR or newer in select unlimited plans. AT&T Inc. T is offering an $800 trade-in credit for iPhone XS Max or newer in select unlimited plans. T-Mobile Us Inc TMUS is currently offering Magenta Max plan customers up to $1,000 credit on iPhone 14 for trading in iPhone 11, 12, 13 Pro or Pro Max models and up to an $800 credit for trading in iPhone X models or newer.

Benzinga's Take: Carrier subsidies for the new iPhone 14 models are similar to the iPhone 13 promotions just a year ago.

At this point, Apple and its devices have become one of the most dependable and predictable sources of cash flow in the market, making it a world-class blue chip investment.

Photo: iPhone 14 courtesy Apple