Apple might consider selling the iPhone like it does Apple Music

Apple might consider selling the iPhone like it does Apple Music
Apple has been raking in the dough from subscription services it offers with recurring monthly payments. Apple Music and Arcade are good examples of what Apple is trying to accomplish and it also has other such services including Apple News+, iCloud and Apple TV+ (which launches tomorrow). But now there is talk about another subscription service that Apple might offer that could prove to be very popular. We're talking about selling iPhones to consumers on a subscription basis.

According to CNBC, Apple could decide to offer bundles containing an iPhone together with services like Apple TV+ and iCloud storage for one monthly subscription price. This was suggested by Bernstein analyst Toni Sacconagi during yesterday afternoon's conference call and Apple CEO Tim Cook seemed to embrace the idea. The executive also noted that consumers already feel as though they are subscribed to a hardware plan through updates and financing plans offered by carriers. "In terms of hardware as a service or as a bundle, if you will, there are customers today that essentially view the hardware like that because they’re on upgrade plans and so forth," Cook said. "So to some degree that exists today. My perspective is that will grow in the future to larger numbers. It will grow disproportionately."

In addition, Apple has its iPhone Upgrade Program which bundles the latest iPhone together with AppleCare+. Once the member has made 12 monthly payments, he or she trades in his iPhone for the latest model and starts a new plan. And this can be done with the customer's carrier involved. The company has also offered promotions that lower the price of a new iPhone with the trade-in of an older model. Apple says that its customers are taking advantage of the trade-in deals in growing numbers. "We also continued to see great results from our trade-in program with more than five times the iPhone trade-in volume we had a year ago," said Luca Maestri, Apple's CFO.

A plan to offer hardware on a subscription basis would be welcome with pricier 5G iPhone models expected next year

Analysts have already dubbed a bundled monthly iPhone subscription plan "Apple Prime" and listening to the comments made by Tim Cook, one would believe that offering a monthly subscription price for bundled hardware is something that Apple's top brass is going to be working on in the near future. "We’re cognizant that there are lots of users out there that want a sort of a recurring payment like that and the receipt of new products on some sort of standard kind of basis and we’re committed to make that easier to do than perhaps it is today," said the CEO. And the last line of his comment indicates that whatever Apple comes up with will be easier to subscribe to than the iPhone Upgrade Program.

Yesterday, Apple announced that iPhone purchases made using the company's Apple Card (which it issues in partnership with Goldman Sachs) will be free of interest for 24 months. That basically matches the financing plan offered by major U.S. carriers.

Turning iPhone sales into a subscription plan dovetails with Apple's focus on its Services unit. After iPhone shipments peaked in 2015, the company made a decision to focus on the large number of active iPhone units with a goal of hitting $50 billion in Services revenue by 2020. That would be double the amount it grossed in 2016. For fiscal 2019, the Services unit generated sales of $46.29 billion which certainly puts the target in range for the current fiscal year that started on October 1st. Apple's Services business is its second largest and most profitable business segment.

Apple could roll out an "Apple Prime" type of hardware subscription program in time to help consumers manage the cost of what are sure to be more expensive 5G iPhones launching next September.



1. Zappo

Posts: 16; Member since: Oct 04, 2016

Interesting and makes sense in a way. Yet where I live I feel more and more people buy their phones outright in order to free themselves from long term carrier subscriptions...

2. japkoslav

Posts: 1531; Member since: Feb 19, 2017

It's possible to do so in my country ... two or three years since they started it. Not just Apple devices but Samsung, Huawei, CAT, Google, Meizu, Sony, Xiaomi, Blackberry, Honor and not just phones but tablets, laptops and gaming PCs. Subscription times

3. sgodsell

Posts: 7491; Member since: Mar 16, 2013

There is already companies that currently offer services that rent hardware on a monthly basis, like Apple's iPads, iPods, Macs, laptops, computers, TVs, appliances, and other things as well. This just means Apple controls everything from the start of someone renting an iPhone each month, with what ever services Apple wants to include within that monthly fee. The entire problem comes with the carriers, and their services, and fees that they offer. Otherwise Apple would have done this with their iPhones, years ago.

13. NarutoKage14

Posts: 1337; Member since: Aug 31, 2016

Phones have gotten good enough that you can keep them for 3-4 years so long as you can replace the battery after 2 years.

4. CreeDiddy

Posts: 2266; Member since: Nov 04, 2011

Apple builds the highest customer retention rate higher than any manufacturer within any industry. This is why they are league leading and in a league of their own. Ask many Apple products do you own besides an iPhone? That number is between 4-5+ products per household that Apple users own besides an iPhone. True statement.

5. sgodsell

Posts: 7491; Member since: Mar 16, 2013

In the US, sure. But for a lot of other countries, then NO.

6. sgodsell

Posts: 7491; Member since: Mar 16, 2013

The two largest smartphone markets in the world, and Apple is in a massive decline. In China Apple only saw a 5% market share in sales last quarter. In India Apple only has around a 1/2 a percent market share, and continues to dry up over there. That is with Apple increasing iPhone production in India.

8. whatev

Posts: 2363; Member since: Oct 28, 2015

How about Samsung? Is it on the charts in China?

10. Vancetastic

Posts: 1666; Member since: May 17, 2017

Literally zero people I know have that many Apple products. Most have an iPhone, and MAYBE an ipad.

15. iushnt

Posts: 3133; Member since: Feb 06, 2013

I guess every household will have atleast one Samsung product than Apple product.

18. Alcyone

Posts: 526; Member since: May 10, 2018

Lol. No.

7. TBomb

Posts: 1616; Member since: Dec 28, 2012

Subscription for hardware sounds like horrible environmental effects are on the horizon. If there is no cost to upgrade (it would be absurd for them to charge to upgrade, then perpetually charge you on top of it), obviously everyone will upgrade which means all those precious materials in the new phones need to be extracted/created and the old phones will have to be recycled. But don't recycled materials get weaker every time they go through the manufacturing process, their life in the wild, and then recycling process? Just my initial thoughts, so take it with a grain of salt, but woof... hardware subscriptions sound horrible to me.

14. NarutoKage14

Posts: 1337; Member since: Aug 31, 2016

Metals are fine after being melted and recycled. It's plastics and other similar materials that can only be recycled so many times.

19. Alcyone

Posts: 526; Member since: May 10, 2018

Its the batteries that are the real problem. Not sure they have figured that into the idea. Imo, is not sustainable, the long term impact is not so good looking. Ex. Prius' and Tesla batteries are just as bad.

9. JCASS889

Posts: 591; Member since: May 18, 2018

Make it easier for people to spend over $1k for a phone.

11. AngelicusMaximus

Posts: 743; Member since: Dec 20, 2017

Apple is the only company that charges $1K for a phone?

12. JCASS889

Posts: 591; Member since: May 18, 2018

No but apple is the only company to make it seem really easy to spend that much on a phone buy offering monthly payments, just because it's not in one lump sum doesn't change the price at all. It's so obvious.

16. AngelicusMaximus

Posts: 743; Member since: Dec 20, 2017

Wrong. Samsung does it as well and so does Google. I'm sure they aren't the only ones either.

17. libra89

Posts: 2308; Member since: Apr 15, 2016

I'm surprised that this wasn't a thing already.
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