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  • Writer's pictureVeronica Irwin

iPhone as a service: Apple’s smartphone subscription is coming

The company is reportedly planning to let people lease hardware on a monthly basis.


3/24/2022

In its quest to diversify its revenue beyond the iPhone, Apple has overhauled its Mac lineup, expanded into wearables and doubled down on subscriptions for services like iCloud, Apple TV+ and Apple Music. The strategy is working: If Apple spun out its services business into a separate company, it would be a multibillion-dollar business.


But the iPhone is still the company's biggest moneymaker by a significant margin. So when Bloomberg reported Thursday that Apple is working on a hardware subscription service akin to its software offerings, it wasn’t a surprise. The subscription would have iPhone users pay for their phones and other hardware on a monthly basis, just like they would a streaming service, according to people with inside knowledge. Apple has not responded to requests for comment.


Apple launched the iPhone Upgrade Program in 2015 as a way for buyers to spread out the cost of a new iPhone with AppleCare+ over 24 months. The program also lets buyers upgrade to a new iPhone every 12 months. Wireless carriers like AT&T and Verizon offer similar installment plans.


The iPhone subscription would reportedly differ in that the monthly fee wouldn't be the cost of an iPhone divided into 24 payments. It's unclear how much the subscription would cost, but Apple is reportedly considering bundling it with AppleCare+ and possibly an Apple One subscription. Apple One subscribers pay one monthly fee for iCloud storage, Apple TV+, Apple News+, Apple Music, Apple Arcade and Fitness+. The subscription may also extend to Apple's other devices, including iPads and Macs.


According to Bloomberg, Apple is also considering the possibility of allowing subscribers upgrade to new hardware annually, like they can under the iPhone Upgrade Program. The subscription service would also make it easier for buyers to stomach upgrading their hardware. People are hanging onto their phones longer, and the right to repair movement has forced Apple to make concessions to allow buyers to fix their devices at home (though its Self Service Program has yet to launch). If buyers had the option to rent hardware rather than plunk down hundreds (or thousands) of dollars outright, they might be convinced to upgrade more often.


Investors think the hardware subscription is a good idea: AAPL stock jumped 1.6% in an hour after the news leaked. The service is currently expected to launch at the end of this year, but Bloomberg noted it could be pushed to 2023 or canceled altogether.


Protocol link: https://www.protocol.com/bulletins/apple-iphone-subscription

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