Lease a phone, yes or no?

[CA]

[top]Why buy the latest smartphone when you can lease it?

We can lease cars and all kinds of other products, so why not a smartphone? TMNG Global, a consulting and strategy firm that works with all the major carriers, is introducing the first mobile device leasing program in the U.S., which will allow operators to offer no-money-down one-year leases for handsets to their best customers.

The Mobile Device LeaseXchange will be administered by MDLx, a subsidiary of TMNG. The program will offer carriers an integrated business system for mobile device leasing along with a technology platform for lease administration and accounting. No carriers have officially signed on to the program but MDLx’s chief marketing officer Tom Murphy told me discussions are ongoing with tier one carriers.

Under the MDLx program, a carrier would be able to offer their top customers the ability to lease a phone for 12 months at about $20-30 a month for the device. They would need to pay for voice and data plans separately and the device would need to be covered through an insurance plan, either though the operator or by the customer themselves. The amount of the payments would vary based on the value of the device and the carrier has the option of waiving the insurance plan, accepting a deposit instead.

http://gigaom.com/2012/01/31/why-buy...igaOM%3A+Tech)

“We’re cutting the commitment to the device in half so there’s no longer a two-year commitment and early termination fee,” Murphy said. “Technology assurance is the value proposition for consumers.”

[DRNewcomb]

It's really like leasing anything else, like a car. For some people (and businesses) it works out well. The lessor can write the phone's depreciation off as a business expense. The one issue I see is that the carriers subsidize the phones and get it back in higher rates. It's as if Ford gave away cars but you had to buy gas at Ford gas stations at $10/gal. In that case, leasing would make no sense at all. So most folks believe that these top-end smartphones actually cost about $200 and are amazed if confronted with their true cost.