Would Smartphone Leasing be Good for Everyone in the Ecosytem?

Wider adoption of smartphone leasing programs could be beneficial for device makers, mobile service providers and consumers alike, some believe.

We expect smartphone leasing to continue to replace subsidies and eventually equipment installment plans in the U.S., especially at market share gainers T-Mobile and Sprint,” analyst Kevin Smithen of Macquarie Securities said.

The key advantage is shifted capital investment in devices on the part of the service provider. Device leasing could provide a boost for handset suppliers as well.

“Sprint’s ‘iPhone for Life’ and other industry leasing plans are much better for Apple than EIP plans because they force the consumer to turn in the phone and upgrade after two-years rather than allowing the customer to keep the device as in EIP,” Smithen argues.

Think of that as a forced obsolescence program, with all the advantages that tends to confer. Plus there is a residual value capture by the leasing entity.