December 6, 2022

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Apple is considering offering an iPhone subscription

Apple is considering offering an iPhone subscription

Apple is working on a subscription service for iPhones and other hardware products, Bloomberg reports, citing sources familiar with the issue.

Wall Street responded to the announcement by sending Apple up more than 2 percent in Thursday’s trading.

The service would make product ownership more like a monthly payment for an app, and would be the tech giant’s biggest step into a recurring revenue (ARR) model. But sources confirm that the project, which he has been working on for several months, is still under development.

The subscription service, which the news agency compares to an automatic rental program, is expected to be launched by the end of 2022. But it could be delayed until 2023, and in fact also ends up being shelved.

Big change in strategy

For a company that generally sold its products at full price straight away, introducing subscriptions would be a major change in strategy. But sales through the subscription system should, according to Bloomberg, be able to increase Apple’s revenue and make it easier for consumers to afford the thousands of dollars that new products cost.

In 2021, Apple’s iPhone revenue came to nearly $192 billion, just over half of all revenue.

The iPhone manufacturer won’t be the first to offer a subscription service on its products. For example, Google has tried a similar approach for Chromebooks in the enterprise market.

– iPhone Deal

Some Wall Street analysts had previously urged Apple to start subscribing to hardware products, and on Thursday, Tony Sakunagi took over at Sanford C. Bernstein & Co.. Forward the analysis again with this message.

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According to Bloomberg, he thinks the iPhone is a bargain compared to coffee at Starbucks and a New York Times subscription.

Many consumers struggle to come up with a single asset they use more than iPhone. And besides, the cost of the iPhone is a bargain relative to other services consumers are willing to pay for, he says.