If given the right price point, Apple’s rumoured iPhone subscription program could make its devices more affordable and reduce device ownership cycles allowing the company to reuse hardware components and expand its reach to new user groups, says GlobalData, a leading data and analytics company
Apple is rumoured to offer an iPhone subscription program this fall that will allow users to lease its devices. The program will enable them to experience the device without a heavy upfront investment or commitment to a device payment plan.
Hardware leasing programs are not a novelty in the US. Sprint launched a leasing program dubbed Sprint Flex in 2017, which was retired by T-Mobile in August 2021.
Apple’s current upgrade program allows its users to pay for devices in 24 monthly instalments. Device instalment options from wireless carriers also work on a similar principle.
The main difference between the rumoured subscription program and device financing programs is that with the latter, users can own the device at the end of the payment plan while with the subscription program, a customer would only lease their device for a limited amount of time and never truly own it.
Deepa Karthikeyan, Technology Analyst at GlobalData, said: “The success of Apple’s rumoured subscription program would ultimately depend on how it compares against existing device financing options, both from wireless carriers and Apple itself where the cost of the device is spread over 24 or 36 months.
It is important to note that current promotional deals from carriers offer users up to $1,000 if they trade in a device or switch carriers, which acts as an incentive for device ownership. Like everything else, the program’s cost and time commitment structure would determine its uptake rate.”
The subscription scheme would also create a viable path for many users to own the latest iPhone model each year. The current reported upgrade cycle is three years.
Karthikeyan added: “For Apple, a subscription hardware program will help bulk up its monthly recurring revenue share by potentially requiring customers to subscribe to its device protection and insurance plans.”
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