March 28, 2022
Apple is reportedly working on a plan that will make its popular iPhone and additional devices available on a subscription basis. Popular first among content providers, then software firms like Microsoft and Adobe, subscription contracts are less usual in the hardware space, other than the long-term payment plans mobile service providers add to a customer’s monthly bill for costlier phone models, including iPhones. Apple itself has been offering iPhones in monthly payments. A hardware “subscription” would possibly bundle other Apple products, like Apple TV and Apple Music.
“The program would differ from an installment program in that the monthly charge wouldn’t be the price of the device split across 12 or 24 months. Rather, it would be a yet-to-be-determined monthly fee that depends on which device the user chooses,” writes Bloomberg, reporting Apple’s subscription service is “expected to launch at the end of 2022, but could be delayed into 2023 or end up getting canceled.”
Apple plans to allow customers to subscribe to hardware using their Apple ID and App Store accounts, according to Bloomberg, which adds that “Apple has been working on the subscription program for several months, but the project was recently put on the back burner in an effort to launch a ‘buy now, pay later’ service more quickly.”
The company has had internal discussions about making hardware subscriptions part of its Apple One bundles and AppleCare support plans, Bloomberg says. Apple One launched in 2020, packaging subscriptions to multiple services like iCloud storage, TV+, Fitness+, Music and Arcade, for a volume-discounted monthly fee.
“The iPhone maker wouldn’t be the first company to push hardware subscriptions,” Bloomberg points out, explaining that “Peloton Interactive Inc. recently started testing a subscription service that lets consumers lease bikes and fitness content for between $60 and $100 per month. Google also has tried a similar approach with its Chromebook laptops, targeting corporate customers.”
Wall Street has been interested in an Apple subscription model. “Sanford C. Bernstein & Co. analyst Toni Sacconaghi pitched the idea of hardware subscriptions in 2016, saying at the time that it could help Apple get to a $1 trillion market valuation,” Bloomberg notes. “Apple hit that milestone without embracing the approach — it’s currently worth $2.84 trillion — but Sacconaghi recirculated the report on Thursday.”