Apple shares climbed to a session high after Bloomberg reported on the news Thursday and closed up 2.3% at $174.07. Though the stock is still down 2% for the year, Apple has now posted eight straight days of increases — its longest streak since November. Adopting hardware subscriptions, akin to an auto-leasing program, would be a major strategy shift for a company that has generally sold devices at full cost outright, sometimes through installments or with carrier subsidies. It could help Apple generate more revenue and make it easier for consumers to stomach spending thousands of dollars on new devices.
According to sources familiar with the matter, Apple Inc. is working on a subscription service for the iPhone and other hardware devices, a move that could make gadget ownership akin to paying a monthly app fee. The service would be Apple’s boldest push towards automatically repeating sales yet, allowing consumers to subscribe to hardware rather than just digital services for the first time. The proposal, however, is still in the works, according to the sources, who asked not to be identified because the effort has yet to be revealed.
The program would differ from an installment program in that the monthly charge wouldn’t be the price of the device split across 12 or 24 months. Rather, it would be a yet-to-be-determined monthly fee that depends on which device the user chooses. The company has discussed allowing users of the program to swap out their devices for new models when fresh hardware comes out. It historically releases new versions of its major devices, including the iPhone, iPad and Apple Watch, once a year.
Already, the iPhone is Apple’s biggest source of sales, generating nearly $192 billion last year — more than half the company’s revenue. A spokeswoman for Cupertino, California-based Apple declined to comment on the company’s plans. The idea is to make the process of buying an iPhone or iPad on par with paying for iCloud storage or an Apple Music subscription each month. Apple is planning to let customers subscribe to hardware with the same Apple ID and App Store account they use to buy apps and subscribe to services today.
Apple has been working on the subscription program for several months, but the project was recently put on the back burner in an effort to launch a “buy now, pay later” service more quickly. Nonetheless, the subscription service is still expected to launch at the end of 2022, but could be delayed into 2023 or end up getting canceled, the people said.