Apple is said to be preparing to make a major change in the way it sells iPhones. You’ll still be able to drop over $1,000 on the latest and greatest iPhone, but if you want to, the company is rumored to be launching a new subscription service that basically lets you rent iPhones and other devices at a fixed cost.
There aren’t many details about the software, but it is said that it will start with the iPhone before expanding to other devices. As it stands, Apple already offers an iPhone Upgrade Program that lets you spread the cost of a new iPhone with AppleCare+ over two years. This program is a loan that requires a credit check and monthly payments to the bank, with the option to upgrade to a new model (and loan) after 12 payments.
If you upgrade regularly, this is a great software for everyone involved. You get a new iPhone and Apple gets a customer while you also get a used phone to flip it over for a good profit. You’ll likely get more for a year-old iPhone by selling it privately or to a third-party supplier, but nothing beats the ease of upgrading in the program: Order your new iPhone, put your old device in the included box, and you’re done. There is no extra cost or hassle.
The subscription service will be different, probably with an attractive name. (I’ll call it iPhone+ for the purpose of this article, but it’s just a guess.) According to a Bloomberg report, the service will be less of a loan and more of a recurring fee like Apple TV+. If you subscribe, you’ll pay a monthly fee until you decide to cut it, like Apple Music or TV+. Mark Gorman speculates that this could mean you end up paying more for the phone than you would otherwise, but it seems likely that Apple will build safeguards to let you know when payments end, offer a trade-in, or simply lower your bill automatically. .
But that doesn’t mean you won’t keep paying more for each device. As it stands, Apple’s iPhone Upgrade Program starts at $39.50 for the iPhone 13 and $54.08 for the iPhone 13 Pro Max. That comes out to $948 and $1,297.92, respectively, if you keep your iPhone for two whole years. If not, you’ll roll over and start over with a new phone. So you can pay as little as $474 before you trade in your iPhone and get a new one. It’s possible that Apple will want to change that with this new service.
For the iPhone + subscription service to work, it must have some value. Apple already sells tens of millions of iPhones each year without the need for a subscription service, so you’ll need to offer something convincing with the iPhone. Get a Google Pixel Pass. For $55 a month, you get a Pixel 6 Pro with Preferred Care, 200GB of Google One storage, YouTube Premium, YouTube Music Premium, Google Play Pass, and “Google Store Deals.” It’s a two-year subscription that offers monthly savings of about $12 on the purchase of each piece individually. The catch is that you can’t upgrade until you’ve paid the full price of the phone.
Michael Simon / IDJ
The iPhone + subscription service will probably be the same. Like Apple One packages, they’re meant to offer an incentive to join and stay. For example, Apple One Premier costs $30 per month for Apple Music, Apple TV+, Apple Arcade, Apple News, Apple Fitness+, and 2TB of iCloud storage. Separately, they will cost $50 a month, so the savings are significant. Apple could do something similar with its iPhone subscription plan, bundle one or more of its services and upgrade iCloud storage for a flat fee. You might get an Apple TV + or additional iCloud storage for free.
The question lies in the promotions. Will Apple allow people to upgrade after 12 batches like the current program? Or will it lock you up for paying the full price of the iPhone? My guess is the latter. Apple’s subscription service will be as much about shutting down as it will be convenient, and the subscription service will be a way to make sure people keep paying for an iPhone as long as they use one. Think of it like Apple Music – you don’t actually have any of the songs in your library, but as long as you pay a monthly fee for them I feel like you are doing.
The interesting part will be with the other products. Apple doesn’t offer upgrade programs for any other products, so a Mac or Apple Watch subscription can be tempting for people who don’t want or have the money to spend on a new, high-priced device. The goal of any subscription service is to make you keep paying forever, and extending the iPhone+ program to other devices would be a great way to do that. A Mac can cost several thousand dollars more than an iPhone, and the ability to pay a much smaller bill over a much longer period would be a way for Apple to get more people into high-end Macs.
Apple already offers a great deal of engagement with its existing products and services. But with the new hardware subscription service, we may end up paying for our products forever and actually not owning any of them.