Bernstein analyst: Apple should stop selling iPhones

“Most Apple Inc. analysts agree that 2018 will be all about the iPhone X for Apple, but some investors are already growing concerned about where the company will turn next to sustain its long-term growth,” Wayne Duggan reports for U.S. News and World Report. “According to Bernstein analyst Toni Sacconaghi, Apple could unlock major upside in its stock if it simply opts to transition to a subscription-based sales model.”

“Sacconaghi says the timing has never been better for Apple to follow in the footsteps of Netflix, Spotify and Microsoft Corp. and push to transition its electronic personal device market to a subscription model,” Duggan reports. “‘Customers could lease iPhones, iPads, Macs, and services such as iCloud and Apple Music for one ‘low’ monthly fee, and have their hardware upgraded after a certain number of years,’ Sacconaghi says, according to CNBC.”

“But even if Apple doesn’t pull the trigger on a subscription model, Sacconaghi says the company is well-positioned heading into 2018,” Duggan reports. “Apple could potentially benefit more than any other U.S. company from corporate tax reform. Bernstein estimates Apple could get an immediate 18 percent boost to its earnings per share should the current Republican tax plan be implemented. Apple has $252 billion in cash overseas and could save more than $47 billion in taxes on that cash if it chooses to bring it back into the U.S. at a 14.5 percent rate during the proposed repatriation holiday.”

Read more in the full article here.

MacDailyNews Take: We sold our iPhone 7 Plus units (which we bought outright last year) for a pretty penny (which we then invested in our new iPhone X units). These monthly lease prices to which Sacconaghi refers had better be rather low vs. buy/use for a year/resell model that works so well for us.


  1. Saw this yesterday and rightly assumed it was a very clickbaity headline. People are already leasing phones, but I don’t see the leasing of iPads, laptops or desktops as happening outside of businesses. Think the writer had a deadline and a need for traffic.

  2. Clearly a clickbait headline, but the underlying principle is pretty well what Apple started doing some time ago.

    Apple doesn’t need to switch to a lease-only model. It’s much better that Apple offers a variety of ways to get iPhones and customers get to choose what suits them best.

    Personally, I always pay up front for an unlocked iPhone and then use a SIM only deal. It’s then entirely up to me when I upgrade. If my existing iPhone continues to suit my needs, then I will stick with it and if something preferable comes along, or if my iPhone gets damaged, then I’ll upgrade at that point. I don’t want to be locked into something like a 24 month cycle, I’ll determine my own timescale.

    A lot of people don’t like software subscriptions and I don’t think that hardware subscriptions will be particularly popular. The area where it might take off is with company-issued phones in countries where the taxation system encourages leasing instead of purchasing, but even then writing off a company phone after 24 months is pretty sensible under many tax systems.

    1. As I’ve said here before, I hate subscription services. Period.

      They are nothing more than protection rackets. Stop paying the monthly fee? You lose access to the applications (which means you lose access to your data) or hardware (which means you lose access to everything unless you can port it over to other hardware–which is not always possible).

      Go back many decades to the “mobs” of old. “Pay us a monthly protection fee, and we’ll make sure nothing bad happens to your business (legs, family, etc.). Stop paying and very bad things *might* happen. (hint, hint)”

      Current subscription software vendors: “Pay us the monthly fee to keep your software running, and we’ll make sure you have access to all your data. Stop paying and we can’t guarantee you’ll have access. Bad things *might* happen. You never know, someone might just tweak data and file formats every once in a while so that if you’re not running the latest subscription service version of the software you can’t open it with anything else (even older, non subscription service versions of the same software).”

      And don’t try to tell me that the data and file formats are published in the open. Just try to open a very complex MS Word document in anything else. Very often the files do NOT import 100% correctly. Sometimes the import is basically useless. Plus, MS is not the only culprit. Try opening a complex Adobe InDesign file with anything else that claims to be able to import InDesign files directly. Good luck.

  3. They already have a subscription model. Obviously. They just don’t call it that. You “finance” a phone for two years, pay monthly at 0% interest, trade up every year. This is functionally and financially no different from a lease.

    1. The MAJOR difference is that after that 24 month period, if you don’t want to upgrade you don’t have to do so and the payments stop. With a subscription model, you keep paying every month or the phone stops working. (Apple would have to put some kind of “kill switch” into the phone to make it stop working if you don’t pay the monthly fee. There would likely be a grace period built in, say 10 – 15 days, but if you don’t pay, you’re phone stops working.)

      Also, if there were a “kill switch” built in, then there are other implications. What if a local government wants to force Apple to shut off your phone? The ability would be built in for the subscription service allowing governments to force Apple to implement it (kill the device) whenever the government wants.

      1. Ever get a declined payment on you iTunes account? I have purchased over 4k songs, 300 movies and numerous apps though iTunes over the years. One 99c subscription didn’t go though due to a frozen card. Suddenly you can’t access ANY previously purchased media. You can’t even update your apps. Literally thousands of dollars of media, games and productivity apps were rendered useless and held hostage over 99c.

        Just imagine what might happen as more medical services and accessories are initiated into the Apple watch.

          1. You are correct downloaded music does not have copy protection and can be played indefinitely. However, you can also can stream you music from Apple if you purchased it. That doesn’t require the iTunes Match service. For example, your music & movies will always stream on Apple TV because it doesn’t have local storage.

            That is assuming you don’t have a 99c debt with Apple.

    2. except they bait and switch by getting you to start on one model (128g, let’s say) and then take that same model away the next refresh cycle for a more expensive one (but somehow still keep the 64g model around year after year). some creative class action lawyer is going to have a field day

      1. Yes there are much cheaper alternatives than Adobe unless you like paying $75 a month for the privilege of stopping your subscription anytime you want. You also end up dealing with agents/employees who live in India if you have subscription issues trying to quit and the offers they try to place in your path not to leave remind me of huckstering techniques from other types of business con artists. Or $cientology.

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