re: Report: iPhone Sales Fail Triggered “Fire Drill” at Apple

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That said, very few people are paying $900 at one time. The carriers are effectively subsidizing the phone by providing interest free loans on the phone (which also has the effect of tying most people to the carrier until paid off). They also frequently run 2 for 1 and other similar promotions.

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My daughter was finally of age to get a phone and I went to get her and my wife a new one on the 2-1 deal and AT&T wouldn't let me pay for it up front. I had to do the monthly payments for 2 years to get the 2-1 deal. Price was the same (interest free) so all I can assume is they want you locked in on a contract and figure you won't notice the $20 drop after 2 years and will just upgrade instead?

It really confuses me when there is no discount for paying up front. Same thing at the orthodontist. I can pay $5k today or break that down into 24 payments and it is the same. Why do they not offer an incentive to get their money on the front end?