According to sources familiar with the topic, Apple Inc is working on a subscription service for the iPhone and other hardware devices, a move that could make gadget ownership akin to paying a monthly app charge.
The service would be Apple’s largest push yet towards automatically repeating sales, allowing consumers to subscribe to hardware rather than simply digital services for the first time.
However, the idea is still in the works, according to the persons, who requested not to be identified since the initiative has not yet been publicized.
Apple subscription service model to buy iPhones
Apple shares rose to a session high after Bloomberg reported the news on Thursday, and the stock finished up 2.3 percent at $174.07. Despite the fact that the stock is still down 2% for the year, Apple has now notched eight consecutive days of gains, its longest stretch since November.
Adopting hardware subscriptions, similar to an auto-leasing program, would be a significant business move for a corporation that has always sold products at full cost, occasionally through installments or with carrier subsidies.
It has the potential to increase Apple’s income and make it simpler for consumers to justify spending hundreds of dollars on new gadgets. Already, the iPhone is Apple’s most profitable product, garnering about $192 billion in revenue last year – more than half of the company’s total income.
The goal is to make purchasing an iPhone or iPad as simple as paying for iCloud storage or an Apple Music subscription on a monthly basis. Apple intends to allow users to subscribe to hardware using the same Apple ID and App Store account they now use to buy applications and subscribe to services.
The program would differ from an installment plan in that the monthly rate would not represent the cost of the equipment divided over 12 or 24 months. Rather, it would be a yet-to-be-determined monthly cost based on the device selected by the user.
When new hardware is released, the business has proposed allowing program members to change out their gadgets for new models. It has a tradition of releasing new versions of its key gadgets, like the iPhone, iPad, and Apple Watch, once a year.
Apple has been working on the subscription program for several months, but it was recently put on hold in order to introduce a “buy now, pay later” option sooner.
Nonetheless, the subscription service is still slated to begin around the end of 2022, although it might be postponed until 2023 or canceled, according to the sources.
According to Bloomberg, the business has been working on a “buy now, pay later” solution for all Apple Pay purchases since last year. The business has held early internal conversations about tying the hardware subscription service to its Apple One bundles and AppleCare technical support plans. Apple introduced the bundles in 2020 to let consumers to subscribe to many services for a reduced monthly charge, including TV+, Arcade, Music, Fitness+, and iCloud storage.
Subscriptions would most likely be controlled via a user’s Apple account on their device, the App Store, and the company’s website.
It would very certainly be an option in Apple’s online shop and actual retail locations as well. Apple accounts are frequently linked to a user’s credit or debit card.
Apple would not be the first firm to promote hardware subscriptions. Peloton Interactive Inc. has just begun testing a subscription service that allows customers to lease bikes and training content for $60 to $100 per month. Google has taken a similar strategy with its Chromebook computers, which are aimed at corporate clients.
And, in the past, Apple has provided different payment plans to split the cost of smartphones, but not with a subscription model.
In 2015, the firm announced the iPhone Upgrade Program, which allowed consumers to stretch the purchase of an iPhone over 24 months and upgrade to a new model every 12 months and was financed by Citizens One Personal Loans.
It also allows Apple Card customers to spread the cost of an iPhone or Apple Watch over a 24-month period or an iPad or Mac over a 12-month period. Wireless providers also provide a variety of monthly payment plans.
Existing services may become less desirable as a result of the new strategy. A subscription program linked to an Apple account would most likely be easier to administer than a carrier program or even the Apple Card installment plans.