Video uploaded by Bloomberg Technology on April 1, 2022
According to reports, Apple is reportedly working on a subscription service for the iPhones and other Apple products. Through this service, subscribers can receive iPhones or other Apple products as part of their subscription, similar to the way current Apple subscriptions like iCloud work. Apple already offers a similar service through their iPhone Upgrade Program where users can pay off an iPhone through EMIs and then upgrade to a new iPhone at the same price, but insiders say that this new plan would be different and may follow the model of their existing subscription services like Apple Music, Apple TV+, Apple Arcade, iCloud+, etc.
Apple is mulling over the idea of tying the subscription program to Apple One bundles and AppleCare support plans. The company believes this service would allow users to get their hands on latest Apple products that are often deemed too expensive for most users and this would generate continuous revenue. Back in 2019, when Apple CEO Tim Cook was asked in a shareholders meeting whether Apple would consider a hardware subscription and he said their company is already working on such a service and if realised this move would culminate in Apple’s long-term objective to dip into the hardware subscription market for the first time. Apple also is in favour of subscription models as the revenue is consistent and predictable. They also believe it would be easier to retain and monetize existing customers than acquire new ones. Apple first introduced bundled services in 2020 to allow consumers to have multiple services subscribed for a lower monthly fee, including TV+, Arcade, Music, Fitness+, and iCloud storage. Apple reportedly made $68 billion in sales driven by subscription-based services like iCloud and Apple Music.
Apple’s most profitable product, the iPhone, generated an estimated $192 billion in revenue last year, accounting for more than half of the company’s total revenue and the company believes that offering a “buy now, pay later” scheme would drive the sales further. This new approach could make the existing iPhone Upgrade Program less appealing. A subscription program tied to an Apple account would likely be simpler to manage than a carrier program or even the installment plans for the Apple Card. Apple may launch several subscription models at different prices. The base subscription might include one generation older iPhone (iPhone 12) while the costliest subscription might include the flagship iPhone (iPhone 13 Pro/Max) bundled with other Apple subscriptions. Apple is not the first company to come up with such a subscription plan.
Google for instance already has in place its Pixel Pass program in the US where users can buy a Pixel 6 or Pixel 6 Pro bundled with Google’s own first-party services for $45 to $55 per month. Microsoft offers Xbox All Access, which gives users an Xbox Series X or Series X console and 24 months of Xbox Game Pass Ultimate at a fee. Apple has declined to confirm the story, but tech insiders believe that this program may well be announced by the end of this year.
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