Apple Inc. plans on a subscription model for iPhone and its related hardware products. This move will make the ownership of an apple device similar to payment of App fee as per some people who know this matter.
What the subscription service is all about?
The subscription service is the most significant push towards automatic recurring sales that enable users to utilize hardware against subscription apart from digital services. The new subscription project happens to be still a work in progress as per people who did not wish to be identified as this initiative was not yet announced.
As per Bloomberg News, apple stocks climbed to a high on Thursday after the news. It closed at a 2.3% gain, up at $174.07. The stock is still down by 2%, though it has posted eight days of successive gains -Apple’s longest streak from November.
The hardware subscriptions approach happens to be considered quite similar to that of the auto leasing option. This will be a significant shift for Apple as it has sold its device at total cost upfront, with installment or carrier subsidies on many occasions. This subscription program will help Apple create more revenue and make this comparatively easier for the customers who had to spend a lot of money to buy the new devices.
iPhone is the biggest revenue earner for Apple generating about $192 billion in the previous year, accounting for around half of total revenue.
The idea of a subscription model is to bring the purchase of an iPad or iPhone at par with using iCloud storage or a Music subscription each month at par. Apple enables consumers to get subscribed to the device using the existing App Store account and Apple ID to buy apps.
This subscription program will differ from the installment program, where the device’s price is split equally across 12 or 24 months. The user’s type of device would determine the monthly fee.
The new program users will be able to exchange existing devices with the latest models when they come out. Every year, Apple has been periodically releasing the latest versions of the devices, including iPad, Apple Watch, and iPhones.
For several months Apple has been putting effort into improving the subscription services model, but the said project was put on the backburner with the quicker “buy now, pay later” service. As per informed sources, the subscription service expected to be launched by the end of 2022 could get delayed into 2023 or canceled.
Bloomberg had reported previous year about Apple’s “buy now, pay later” scheme for all transactions on Apple Pay.
The iPhone maker is not the first hardware company to push for a subscription model. Peloton Interactive Inc. started its subscription services recently that allow consumers to lease fitness bikes for $60 to $100 every month. Google has also followed a similar approach targeting corporate customers for Chromebook laptops. Apple internally discusses bundling the hardware with Apple One and Apple Care technical support plans into a single monthly subscription fee.
