Apple to sell the iPhone as a hardware subscription service

According to a new report from Bloomberg, Apple is reportedly working on selling iPhones and iPads as part of a hardware subscription service, whose author Mark Gurman writes that the service could arrive as early as next year.

The move would fit into Apple's continued push toward subscription services as a whole. In recent years, Apple has increasingly emphasized recurring subscriptions like Apple Music, Apple TV Plus, Apple News Plus, Apple Fitness Plus and Apple Arcade as key new revenue streams for the company. Many of those services have already been included in the company's Apple One bundles as well.

We've already seen a similar change on the hardware front: Apple added a monthly subscription model for its AppleCare extended warranties in 2019. And Apple offered its iPhone Upgrade Program, which allows customers to pay the combined cost of AppleCare and an iPhone for 24 months and the option to trade in your device after 12 months of payments since 2015. So both programs already resemble a hardware subscription in many ways.

According to the Bloomberg report, the monthly charge would not simply be the device's price divided by 12 or 24 months. Instead, it would be an as-yet-undecided monthly cost, potentially with the option to upgrade to new hardware as it is released. And like Apple's other subscriptions, it would be tied to a user's existing Apple ID account, with the ability to be combined with AppleCare or Apple One services too.

Right now, you can pay Apple monthly for its services, and you can pay monthly for an iPhone, but those are still separate fees and plans to manage.

It's hard to imagine that Apple will lend out devices on a monthly basis: can you really pay to "subscribe" to an iPhone for a single month, as you can for Apple TV Plus for a season of Ted Lasso? ? Similarly, a world in which Apple makes customers spend months of capital on renting a device only to have it returned at the end of the process seems equally unlikely.

Apple may simply be looking to cut out the middleman and expand its installment payment offerings to other products. For example, the iPhone Upgrade Program effectively gets customers to take out an interest-free loan with Citizens One, which they then repay throughout the 24-month plan. Apple also allows Apple Card customers to pay for Apple products in monthly installments without paying interest, which is also limited to a small subset of Apple customers. An Apple-based subscription service could remove those requirements and allow Apple to expand it to other hardware products (like the iPad or its Mac computers).

But while details are still scant, one thing is clear: Apple's subscription ambitions are just getting started. TAGS: Apple subscription service, Apple