Main Highlights:
- According to a recent Bloomberg story, Apple is considering selling iPhones and iPads directly as part of a hardware subscription service.
- Apple has emphasized recurring subscription services such as Apple Music, Apple TV Plus, Apple News Plus, Apple Fitness Plus, and Apple Arcade as significant new revenue streams in recent years.
- Apple has offered its iPhone Upgrade Program since 2015, allowing consumers to pay for AppleCare and an iPhone over 24 months with the option to trade in their device after 12 months of payments.
- Customers enroll in the iPhone Upgrade Program by borrowing from Citizens One an interest-free loan, which they repay throughout the 24-month plan.
- Members of the Apple Card can also pay for Apple products in monthly installments without incurring interest; however, this option is only available to many Apple users.
According to a recent Bloomberg story, Apple is considering selling iPhones and iPads directly as part of a hardware subscription service. According to Bloomberg’s Mark Gurman, the service may launch next year.
Apple’s approach
This approach would be consistent with Apple’s overall drive toward subscription services. Apple has increasingly emphasized recurring subscription services such as Apple Music, Apple TV Plus, Apple News Plus, Apple Fitness Plus, and Apple Arcade as critical new income sources during the last several years. Numerous such services have already been integrated into Apple’s Apple One packages.
We’ve already seen a similar shift in the hardware sector: Apple introduced a monthly subscription plan for its AppleCare extended warranties in 2019. And, since 2015, Apple has provided its iPhone Upgrade Program, which enables users to pay for AppleCare and an iPhone over 24 months with the opportunity to trade in their device after 12 months of payments. Both of those apps already have a strong resemblance to a hardware subscription in several respects.
iPhone’s monthly fees
The monthly payment would not be the device’s purchase price divided by 12 or 24 months, but rather a yet-to-be-determined monthly fee, maybe with the ability to upgrade to new technology as it becomes available. And, like Apple’s other subscription services, it would be linked to a user’s current Apple ID, with the option of bundling in AppleCare or Apple One.
At the moment, you may pay Apple monthly for its services and an iPhone – but they remain distinct costs and programs to manage. It’s challenging to picture Apple merely renting equipment every month — would you be able to “subscribe” to an iPhone for a single month, as you do with Apple TV Plus for binge-watching a season of Ted Lasso? Similarly, a scenario in which Apple requires users to commit months of dollars to rent a product and then return it seems equally improbable.
Apple may just be seeking to eliminate the middleman and expand its installment-based payment offers to other items. Customers enroll in the iPhone Upgrade Program by taking out an interest-free loan from Citizens One, which they subsequently return throughout the 24-month plan. Apple Card members can also pay for Apple items in monthly installments without incurring interest, however, this option is available to a restricted proportion of Apple consumers as well.
A subscription service powered by Apple might eliminate those constraints and enable Apple to spread it to other hardware items (such as the iPad or Mac desktops). While specifics remain few, one thing is certain: Apple’s subscription ambitions are still in their infancy.