Apple Working on Hardware Subscription Service: According to those who are aware of the issue, Apple is currently working on subscription services for the iPhone and other hardware devices, which could see device ownership become like paying for a monthly app.
This would be Apple’s most significant push in automatically recurring sales, which allows users to purchase devices for the first time instead of solely digital services.
However, the idea is being developed, said people who requested not to be identified since the project hasn’t been officially publicly announced.
Apple shares increased to a record high during the session after Bloomberg published a report on the story on Thursday.
The shares closed in the red by 2.3 percent to $174.07 (roughly the equivalent of Rs. 13,200). While the stock is at a 2 percent loss for this year, Apple is now posting eight consecutive days of gains which is the longest stretch since November.
Like an auto-leasing plan, achieving hardware subscriptions could be a significant strategy change for a company that typically offers devices for sale at a total price with installments or carrier subsidies. This could aid Apple to increase its revenue and help customers accept spending thousands of dollars on new gadgets.
In the beginning, the iPhone is Apple’s largest source of revenue, producing almost $192 billion (roughly around Rs. 1463529.6 crores) this year — more than half of the company’s revenues.
The iPhone was responsible for over half of Apple sales last year. A spokesperson for Cupertino located in California, Apple declined to discuss the firm’s plans.
The goal is to make purchasing devices like an iPhone and iPad as easy with the cost of the storage of iCloud and the Apple Music service every month. Apple plans to allow customers to subscribe to its hardware using an identical Apple ID and an App Store account to buy apps and then subscribe to services currently.
The program will differ from an installment plan in that the monthly cost will not include the cost of the device spread over twelve and 24 months. Instead, it would be an undetermined monthly cost based on the device the user selects.
The company has been discussing offering users of the program to swap their current devices to new ones as new hardware is released. It typically introduces updated versions of its flagship devices, such as iPhone, iPad, Apple Watch, iPhone, iPad, and Apple Watch every year.
Apple has been working on the subscription service for some time, but the plan was put on the back burner to introduce the “buy now or buy later” service faster. However, the subscription service is expected to go live by 2022 at the closing; it could be delayed to 2023 or even be discontinued, as the sources said.
Bloomberg revealed in the past year that Apple is developing the development of a “buy now and make payment later” service that will be available for every Apple Pay transaction.
The company has held preliminary discussions with its internal team about bringing the subscription program for hardware in the Apple One bundles and AppleCare technical support plans. Apple introduced the bundles in the year 2020 to let customers subscribe to a variety of services, including TV+ Arcade, Music, Fitness+ and iCloud storage — all for less per month.
A customer’s Apple accounts could manage the subscriptions on a device and via the App Store and the company’s website. It could also be available for purchase at the Apple store online and at its physical retail outlets. Apple accounts are usually linked to a customer’s debit or credit card.
The iPhone maker isn’t the first to offer hardware-based subscriptions. Peloton Interactive. recently began testing a subscription program that lets users rent bikes and fitness-related content for as little as 60 dollars (roughly Rs. 4500) or the sum of $100 (roughly Rs. 7,600) per month. Google also has attempted the same approach using their Chromebook laptops, aimed at corporate customers.
Also, Apple has offered some installment plans in the past to divide the cost of gadgets but not in the option of a subscription.
In 2015, Apple introduced its iPhone Upgrade Program, funded by Citizens One Personal Loans, which let customers split the costs of their iPhone for 24 consecutive months and then upgrade to the latest design every year.
The program allows Apple Card users to divide the iPhone and Apple Watch costs over 24 months or an iPad or Mac over 12 months. Wireless carriers have a range of monthly installment plans as well.
The new method might make existing services less attractive. A subscription program tied with an Apple account will likely be more accessible to manage than a traditional carrier program and the plans for installment that are available for an Apple Card.
A few members of Wall Street have previously urged Apple to change to a subscription-based model. Sanford C. Bernstein & Co. analyst Toni Sacconaghi floated the idea of hardware subscriptions in the year 2016 and stated that it could aid in helping Apple reach the $1 trillion (roughly the equivalent of.
72.85.950 crores) market value. Apple has reached this milestone, but without accepting the strategy, it’s currently worth $2.84 trillion (roughly around Rs. 2,16,46,764 crore), But Sacconaghi circulated the report Thursday.
He claimed that the iPhone is an affordable option compared to Starbucks coffee or the New York Times subscription.
“Many users would be unable to think of one device they’d rather use then their phones,” he said. “Moreover the cost for the iPhone is an affordable price against other services that consumers are willing to pay.”