Apple is reportedly working on hardware subscriptions for its devices, including the iPhone. Unlike installment plans, which Apple’s offered since 2015, the subscription would be more like a lease program with the option to upgrade devices periodically.
Adam Levy for The Motley Fool:
An iPhone subscription service could provide a great complement to Apple’s existing subscription services with significant potential to bundle the service and lock customers into the Apple ecosystem.
Two-thirds of iPhone owners already subscribe to iCloud in some form, according to Consumer Intelligence Research Partners. Half of iPhone users have an Apple Music subscription, and one-third have an Apple TV+ subscription.
Adding an iPhone subscription to the [Apple One] bundle could make perfect sense. Apple could offer significant savings to its most loyal customers — those who upgrade their iPhone extremely frequently. It could also make it easier for customers to afford the chance to use the most recent iPhone.
Instead of breaking up the cost of an iPhone into simple installments, Apple can instead charge customers close to the depreciation rate on a new iPhone over the course of the first year plus its cost to insure the device. That would theoretically be less than the installment cost of an iPhone purchase with the potential for more frequent trade-ins. The downside is the customer never actually owns the device. On the other hand, about one-third of iPhone purchasers trade in their old device when purchasing a new one.
MacDailyNews Take: Many Mac, iPhone, and iPad users would flock to this subscription services if Apple does indeed offer it – especially those who like to stay current on Apple’s latest and greatest devices. It would allow Apple to sell to most price-sensitive customers while generating even greater loyalty to the company’s products.
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I’m not as optimistic about this strategy as Apple or MDN seems to be. I think plenty of customers would prefer to just pay outright or on installments and then keep using their devices for longer. Maybe a select few will see it as a bargain if they constantly want the latest – but your average user, no. The only thing would be if Apple forces people onto the subscription plan by removing the option to pay outright or in installments, which I think would garner a lot of resentment from customers – it already is from application developers who are only offering subscriptions (Adobe Creative Suite, MS Office, etc).
I don’t think Apple will ever stop selling hardware outright. This sounds more like another way to get people who shouldn’t be buying Apple devices in the first place (because they can’t afford them) onto a recurring subscription. It should actually increase the supply of discounted refurb devices being sold by Apple providing people both the subscription to get new tech and the refurbs as alternatives to the full-priced ~$1,000+ iPhones. It’s probably the best way for Apple to expand its customer base without eating into its margins by lowering prices.
I for one would like to see better trade-in credits for loyal customers who regularly buy Apple products. It may seem trivial but even little things like “an Amazon customer since 1999” and personalized recommendations, or Tesla’s individualized approach to customers, is something Apple could really improve upon. For being perhaps the most loyal customer base in consumer history it doesn’t feel like Apple really cares. Heck, charge us an “Apple Premium” subscription but give us some extra benefit in tech support, discounts or other incentives.
I’m sure it’ll be profitable. Apple could get back a “leased” iPhone after two years (without paying for it), give it some new parts, and sell it as a certified refurb for more profit from same device. But I’m on the trailing edge of tech, not the leading edge 😏 iPhone SE (2016), 2017 MacBook Air, 10.5-inch iPad Pro (last Pro one with Home Button)…
If “owning” customers are treated like music “owners,” the change doesn’t bode well for those chosing to own.
The music owner–even those that have purchased boatloads from iTunes/Apple–are 2nd class citizens. It’s too bad that Apple doesn’t keep the music owner’s path open and vibrant. I purchased WAY MORE digi music–than analogue–because iTunes’ enabled and encouraged exploration that led to purchases. Because of Apple’s shift, iTunes is now like a backroad and opening the Music app is mostly by mistake.
The upgrade cycles for iPhones are increasing because the durability of the phones and the lack of new features that drive interest in upgrading. The last few iPhone upgrade cycles have largely been based on camera features. We are reaching the point of diminishing returns in terms of performance and cost. Apple is adjusting to secure profits. Apple hardware subscriptions aren’t to save end users money. But this is a great move for AAPL stock holders
“You Will Own Nothing and Be Happy,” Klaus Schwab
“I will slap no-one and be happy,” said I, slapping that disgusting “Dr Evil” style-slapper, Klaus F–Wit Bond-Villain Schwab.
Works for me. I have no desire to own any modern tech inc cars. Let them be respectfully used and regularly re-cycled.
Joe Biden is Will Smith, slapping every American’s face and wallet mercilessly and repeatedly. Joe Biden isn’t even Obummer’s left testickle.