Skipping the iPhone XS

I’ve had an unopened iPhone XS on my desk since last Monday. I ordered it through the iPhone Upgrade Program, and I’m trying to decide if I’m going to keep it.

After owning the original iPhone for three years, and an iPhone 4 and iPhone5 for two years each, I switched to buying a new phone every year. I calculated that the depreciation on the iPhones 6, 6S and 7 was about $300 in the first year, and $200 in the second year1, so it was costing me an extra $100 (plus tax) in the odd years to buy a new phone instead of holding on. That worked out to less than an extra $50/year (plus tax) to own the newest phone every year, compared to holding on to a phone for two years.

$50 each year seemed like a great deal for the latest technology, but that value proposition has changed. The costs I’ll incur if I upgrade this year include:

Sales Tax: $84.25

AT&T Upgrade Fee (plus tax): $31.88

The last payment on my iPhone X (since it’s only been out 11 months): $49.91

The residual value of a two-year old iPhone X, if I were to keep it another year and own it outright. This is tough to estimate, but resellers are offering $225 - $350 for a two-year iPhone 7+ right now; let’s go with the low-end to make the medicine easier to swallow: $225.00

The total cost of $391.04 is the amount I’ll save if I wait and buy next year’s iPhone, instead of buying the iPhone XS and upgrading again next year. Spreading that premium out over two years is roughly $200/year (including tax); that’s a massive increase over the prior situation.

Part of that increase is that the iPhone Upgrade Program includes AppleCare+, which I’ve never purchased before. Part is that the iPhone X and XS are more fundamentally more expensive than previous generations. Part is the cost associated with just handing the phone back to Apple, instead of dealing with the hassle of a private sale. But I’m not sure if the cost is justified, for me, this year.

The improvements aren’t as numerous, either:

Better camera sensors and ISP. This looks like a substantial improvement, although there are also reports of overly-aggressive noise filtering.

Modestly faster processing.

More scratch-resistant screen. My iPhone X has more scratches on the screen than any other iPhone I’ve owned.

AT&T models are now compatible with Verizon, again2.

Maybe the strongest indication that I should pass on the iPhone XS is that I haven’t caved in to the temptation to open it yet.

I think I’ll be skipping this one.

Assuming a private resale. ↩

While this has been true in the past, it wasn’t true with the iPhone X. And while I’d like the flexibility, I’m not sure I’d make use of it during the next year. ↩