Updated from June 7 with additional information.
While the HomePod speaker, a new augmented reality platform and other announcements have attracted attention during Apple Inc.'s (AAPL) - Get ReportWorldwide Developers Conference this week, the launch of the tenth-anniversary iPhone 8 later this year is still the main event of 2017.
Apart from its impact on Apple's fortunes, however, the new iPhone will also have an outsized influence on the wireless industry, where Verizon Communications Inc. (VZ) - Get Report , AT&T Inc. (T) - Get Report , T-Mobile USA Inc. (TMUS) - Get Report and Sprint Corp. (S) - Get Report have used iPhone promotions, unlimited data plans and other offers to pry customers away from rivals.
"Without question, the iPhone launch will be a key catalyst for carrier competition in late 2017, along with Black Friday, the holidays, and a rumored [Samsung Galaxy Note 8] launch," said Jeff Moore of Wave7 Research, which tracks smart phones and mobile phone subscribers.
In the latter half of last year, T-Mobile USA got things started with promotions around the iPhone 7.
"They were the initiator of heavy competition," Moore said of T-Mobile, noting that the carrier kicked up competition after the iPhone 7's launch in September and through the Thanksgiving shopping blitz.
"It was T-Mobile USA that made the first move and the other carriers matched or AT&T in the case of Black Friday, did not match," he added.
T-Mobile USA currently has a "Ditch Verizon" offer promising to pay off the balance that customers owe on their iPhone SE, 6S or 7, though the carrier offers the same deal to customers using an Alphabet Inc. (GOOGL) - Get Report Google Pixel phone.
Despite the iPhone deals and the aggressive tweets and comments of CEO John Legere, Moore said T-Mobile is not the most aggressive discounter overall.
"Sprint is definitely the most promotional," he said, noting that the carrier offers "a confusing rotisserie of promotions" that range from phone deals to discounts for multiple lines.
Currently, Sprint has an "iPhone 7 on us" offer that gives customers who lease an iPhone 7 or iPhone 7 Plus a second iPhone 7 with 32GB of memory for $0 per month.
Verizon is the next most promotional, and AT&T is the least.
"Sometimes AT&T will sit out," Moore said. "They really had no offers worth discussing during last Black Friday." When AT&T does offer deals, it often involves its DirecTV pay-TV service.
The tenth-anniversary iPhone 8 has already generated so much buzz that Tim Cook has suggested that media coverage of the the upcoming device is holding back sales of the iPhone 7. If the next iPhone actually blows the iPhone 7 out of the water, the carriers could use promotions to bludgeon each other.
"I would expect a lot of promotions around that because it's the most popular handset in the country," said Recon Analytics analyst Roger Entner about the iPhone 8, noting the huge base of customers devoted to Apple devices.
Editors' pick: Originally published June 7.
While AT&T and Verizon have struggled to add customers, industry churn rates, or the number of account deactivations divided by the customer base, are relatively modest. AT&T, Verizon and T-Mobile each have churn a little above 1% for post-paid accounts, while Sprint's rate is a bit higher at 1.75%.
Entner said that if turnover is low and customers are maintaining their contracts for relatively long periods, the net present value of an account goes up. "Churn rates are around 1%, which indicates several thousand dollars of a net present value and makes all of these promotions worthwhile," he said.
Carriers offered a range of buy-one-get-one-free or free-iPhone-with-a-trade-in offers last fall when the iPhone 7 was launched. At Thanksgiving, all of the carriers except for Sprint had free deals for Apple's coveted device. Craig Moffett of MoffettNathanson LLC suggested in a late May report that the iPhone offers fed a competitive environment that ultimately caused Verizon to launch an unlimited data plan, something the carrier had long resisted.
If the iPhone 8 is exceptionally expensive, of course, freebies become more expensive for the carriers.
"There is some upfront costs to these things but it is an opportunity for them to grab share. It's a reason for people to switch services," Amy Yong of Macquarie Capital (USA) Inc. said.
And the opportunity to grab new customers will be difficult for the carriers to resist.
"I would imagine another intense promotional activity in the back half of the year. There usually is with an iconic launch," Yong said.
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