Apple's iPhone hardware subscription could arrive by March

AppleInsider

The rumored iPhone hardware subscription is still apparently on the way, possibly by March or April, as engineering issues have so far prevented Apple from launching the program.

iPhone 13 and iPhone 13 Pro Max

Reports from early 2022 proposed that Apple was continuing to work on bringing its Services model to its hardware business, by providing iPhones and other devices to consumers for a monthly fee. However, in 2023, it seems it may be quite a while before such an offering becomes a reality.

In Sunday's "Power On" newsletter for Bloomberg, Mark Gurman insists that Apple is working on four fintech projects at the moment. Two, Apple Pay Later and the Apple Card Savings Account, have been announced, but Apple is also still developing "Apple Pay Monthly Installments" as well as the iPhone subscription program.

The subscription was meant to be introduced in 2021 with the iPhone 13, or with the iPhone 14 in 2022, but it continued to deal with "engineering and technical setbacks that have led to slow progress and missed deadlines."

Both the iPhone subscription and the Monthly Installments project are still underway at Apple, Gurman writes, adding that it is clear "the financial push has proven more difficult than expected." This is in part because Apple is working on an underlying platform for its financial services called "Project Breakout," which will include "checks, approvals, and transaction histories" typically handled by its other financial service partners.

While Monthly Installments and an iPhone subscription sound similar in concept, they are different as the iPhone hardware program's monthly charge "won't be the price of the device split across 12 or 24 months," says Gurman.

Instead, it would be a "yet-to-be-determined monthly fee that depends on which device the user chooses," and not a fee that will necessarily result in the user eventually owning the device.

If Apple really is still working on the subscription, Gurman believes a launch for the iPhone subscription could happen by March or April.

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red oak

That could drop the monthly cost of having an iPhone by 40% or more, down to neighborhood of  $20/mo.   Apple would get the phone back after two or 3 years years, and then re-sell it to the secondary market. 

Huge potential market share driver

robin huber

Isn’t there already a similar program where you get a new phone every year while making a continuing monthly payment? How does that compare?

caskey

I’m on that plan and I think I can explain. Even though on the surface it looks very similar, the current version is really a disguised financing plan by a third party bank. Apple integrates the process really strongly so if feels like they’re the one selling you monthly payments but they really get payment for the phone in full. You pay monthly payments to the bank that does the financing and at the end of a year, you have the option to send the phone in and the bank and Apple have a backend deal where Apple pays them the balance due and then can turn around and refurbish the phone and resell it. You can also keep the phone and keep making payments and if you pay it off you keep it. 

This new product seems to be a true subscription run by Apple where they charge monthly and you are renting the device. 

robin huber said:

Isn’t there already a similar program where you get a new phone every year while making a continuing monthly payment? How does that compare?

darkvader

Ugh, what a horrible idea.

Why would anybody want to pay for a phone in perpetuity?  I'll keep doing it right, I'll buy a phone and own it.

Stabitha_Christie

darkvader said:

Ugh, what a horrible idea.

Why would anybody want to pay for a phone in perpetuity?  I'll keep doing it right, I'll buy a phone and own it.

What is it like to not be lack the ability abstract and think beyond your own personal situation? It sounds really awful.

thedba

darkvader said:

Ugh, what a horrible idea.

Why would anybody want to pay for a phone in perpetuity?  I'll keep doing it right, I'll buy a phone and own it.

While a subscription model may not appeal to you, it could be useful to many whose business depends on it.

Or to those that really want to have the latest and greatest every 1-2 years.

In the end you have to calculate how much do you pay for your phone and how long you keep it on average.

danox

Dumb to the extreme………

danox

thedba said:

darkvader said:

Ugh, what a horrible idea.

Why would anybody want to pay for a phone in perpetuity?  I'll keep doing it right, I'll buy a phone and own it.

While a subscription model may not appeal to you, it could be useful to many whose business depends on it.

Or to those that really want to have the latest and greatest every 1-2 years.

In the end you have to calculate how much do you pay for your phone and how long you keep it on average.

It is the Aaron rents you own nothing and be happy era. What does it tell you when extremely wealthy people want to have you rent and pay a subscription for every little thing.

Modern sharecropping……. A dead wrong idea as a society we should be encouraging a more frugal approach to money, personal finance education obviously is a shortcoming not just in America, but it appears the world.

Appleish

My array of Apple stuff is in a perfect place to wait for the details of hardware subscriptions. I don't anticipate needing any Mac, iPhone, Apple Watch, AirPod etc purchases for a couple of years or so.

I am interested in this and curious to see if them make it worth my while. The iPhone Upgrade Program, for instance, never really worked for me. Not a great improvement over buying outright financially. Also, some limitations in convenience. 

alpacatje

I guess the subscription will not only be for the iPhone. But for the complete package. Meaning: iPhone, iCloud+,appletv+,Apple Music, etc. 

I saw a article about this a few years ago. Something like paying $100/month for the complete package of services + iPhone. 

I must admit, as a private user a would be completely against. However since 2 years i have my own company and would definitely take this option if it would be possible. 

Skeptical

Rumor has it March will come after February, and before April. Stay tuned. 

lkrupp

darkvader said:

Ugh, what a horrible idea.

Why would anybody want to pay for a phone in perpetuity?  I'll keep doing it right, I'll buy a phone and own it.

Lots of people lease their automobiles instead of buying them. To each their own. Lots of people with low incomes use those ‘rent-to-own’ outfits for their appliances.

lkrupp

I do see the huge potential for fraud here too. “My leased iPhone was lost/stolen. Gimme a new one.” and the lost one is fenced for parts.

Drummerlad

I’m on the current upgrade program, and love it.  This is just gonna be a better version of what already exists. For those that like to have the latest phone, this will be the cheapest way.  For those that keep their phone for 4 or 5 years, well, they can just keep buying their phone,  For those that are haters on this idea, they just need to get over themselves and realize that many of us love always having the latest phone, and this will be a cheaper way to do that.  

robin huber

caskey said:

I’m on that plan and I think I can explain. Even though on the surface it looks very similar, the current version is really a disguised financing plan by a third party bank. Apple integrates the process really strongly so if feels like they’re the one selling you monthly payments but they really get payment for the phone in full. You pay monthly payments to the bank that does the financing and at the end of a year, you have the option to send the phone in and the bank and Apple have a backend deal where Apple pays them the balance due and then can turn around and refurbish the phone and resell it. You can also keep the phone and keep making payments and if you pay it off you keep it. 

This new product seems to be a true subscription run by Apple where they charge monthly and you are renting the device. 

robin huber said:

Isn’t there already a similar program where you get a new phone every year while making a continuing monthly payment? How does that compare?

Thanks, Caskey, most informative. I’ve been doing the 0% finance option Almost since they offered it. Free money basically. Instead of $800 sitting in my phone while it depreciates, it’s stays in my account earning interest. After two years the phone is mine. If I want a brand new one after a year my current half paid off phone migrates to my wife and everyone is happy. Then we sell hers on Craigslist for lots more than Gazelle. 

doggone

I am currently on the iPhone Upgrade program where you pay 1/24 of the cost per month but you can upgrade the phone every 12 months.  If you do that you do have to pay som fees and taxes when you get the new phone.  I've been doing that for the last 4-5 years but this year I didn't bother with a new phone since the new features were compelling enough.
So would this subscription model work for someone like me that wants a new phone every 1-2 years or is it for those who hold on to a phone for 3-4 years?

Maybe this is all about Apple becoming a finance company.  That is one way for them to take more of the profits and not give it away to a bank.  That makes sense given how much cash Apple has to play with.  
I really like what Apple has done with the AppleCard.  It is so well designed and works beautifully.  Instant cash back, instant notification of charges, easier view of monthly charges, easy access to statements.  Basically everything a bank doesn't do because they are cheapskates.

mobird

My question is what from an engineering standpoint could possibly be a barrier? Is it more to do with the software side of this project? I don't understand what would need to be "engineered" from a hardware perspective.

Thoughts?

charlesn

darkvader said:

Ugh, what a horrible idea.

You should really just create a shortcut to make this the opening line of everything you post. It would work. 

What you call a "horrible idea" is exactly what car makers have done very successfully for decades with leasing. The way I would imagine it will work is like this: sign a deal with Apple to lease the iPhone for your choice for 3, 4 or 5 years and get a very low monthly rate to pay -- the longer the lease, the lower the rate. At the end of the lease you return the phone to Apple and start again... or not. Why is this good? It opens up the iPhone market to many people who might not have, or might not want to spend, the money required to buy one outright, but they could do low monthly payments. And, as with car leases, the lower monthly payments allow you to get a more expensive model that you could otherwise afford. So this should boost the iPhone Pro lineup. Apple might also offer some form of longer term AppleCare, either rolled into the lease price or offered at a modest upcharge, so that you're also covered for repairs during the lease period. This whole initiative should really expand the iPhone user base by making iPhone "ownership" available to many more people. 

Of course, if you want to still buy a phone outright you can. That's not doing it "right," that's doing it your way which is fine. I really wish you would launch a publicly-owned company run by the "right" rules according to darkvader. No, I wouldn't want to invest, but I'd love to short the stock. 

jayweiss

Engineering issues are most likely a software one. Apple will need the ability to shutdown a single iPhone without shutting down an entire Apple ID/iCloud account which is what they would have to do today. 

danox

Who came out better in the North Sea oil extraction? the UK or Norway one country thought in the long term and the other one only thought in a the short term take a guess who is doing better as a country, one has the sovereign fund the other has tax cuts to the upper division. Aaron rents and spending money that you don’t have isn’t the road you want to be on no matter how kind the company Apple appears to be.