Verizon, AT&T & T-Mobile are all announcing new wireless plans which make it easier for people to upgrade their phones annually. I’ve long imagined that Apple would eventually introduce a subscription package which guarantees you the latest iPhone hardware so long as you return the previous device “gently used.” Combine consumer demand for the latest & greatest along with rising enterprise-provided smartphones (not to mention people who are expensing their phones in a BYOD world) and you have a meaningful group of early adopters for whom this may be very attractive.

One implication of faster replacement cycles would be many more second-hand phones entering the resale market, not just from consumers themselves but from carriers who receive these as trade-in. In all the discussion about an affordable iPhone and the design concessions Apple would need to make to hit a <$100 pricepoint, is it possible that the real “cheap” iPhone is really a used phone resold? Think about it – Apple works with carriers to get 10-25% of customers on to the “Annual iPhone” plan. In return, they encourage the carriers to resell used iPhones (which aren’t subsidized) as many times as they can, with the carrier keeping the profit margin each time. Not crazy since the profit margin on a true “cheap” iPhone would be small for Apple anyway.

Apple plays the LTV game – get as many people on iOS as possible – and soak the early adopters for hardware margin while the rest of the economic pyramid adds value via developer network effects, iTunes purchases, etc.

Your iPhone today is someone’s cheap iPhone tomorrow.