Apple is shelving its plan to offer the iPhone for a monthly subscription, Bloomberg reports. The company was previously said to be exploring the possibility of hardware subscriptions in 2022, but much like the company’s “buy now, pay later” product, Apple Pay Later, it seems that ultimately proved too problematic.
The hardware subscription was rumored to work in a similar way to existing options like the iPhone Upgrade Program or Apple Card Monthly Installments, where you pay for a new phone or other Apple device with monthly payments, and in some cases get the option to upgrade to a new device without changing your subscription fee. Unlike those payment methods, which apply your payment to a one-time loan from Citizen One or Goldman Sachs, Apple’s subscription was being managed through an Apple account and could be used with any payment method you already have connected.
Apple’s hope was that if it made the cost of the iPhone straight forward, people would upgrade more often and the company’s recurring revenue would increase. The problem is that, like Apple Pay Later, which lets you split Apple Pay purchases into four smaller installments, hardware subscriptions could require Apple to “follow the same rules as credit card companies,” Bloomberg says. That’s extra scrutiny the company didn’t want to invite.
Apple is shelving its plans to offer the iPhone for a monthly subscription, Bloomberg reports. The company was previously said to be exploring hardware subscriptions in 2022, but like the company’s “buy now, pay later” product, Apple Pay Later, it seems that ultimately proved too problematic.
The hardware subscription was rumored to work in a similar way to existing options like the iPhone Upgrade Program or Apple Card Monthly Installments, where you pay off a new phone or other Apple device with monthly payments, and in some cases get the option to upgrade to a new device without changing your subscription fee. Unlike those payment methods, which apply your payment to a one-time loan from Citizen One or Goldman Sachs, Apple’s subscription was being managed through an Apple account and you could use any payment method you already had connected.
Apple’s expectation was that if it bore the cost of the iPhone directly, people would upgrade more often and increase the company’s recurring revenue. The problem is that, like Apple Pay Later, which lets you split an Apple Pay purchase into four smaller installments, hardware subscriptions could require Apple to “follow the same rules as credit card companies,” Bloomberg says. That’s extra scrutiny the company didn’t want to invite.
Hardware subscriptions could also cause potential strain on Apple’s relationship with carriers. You can buy the iPhone 16 from T-Mobile or Verizon with an installment plan that may technically be different from a subscription, but certainly feels like an installment plan when you’re making monthly payments.
Apple’s hardware subscription was never officially announced, but it shows there could be a major return from the headache of financial services. Apple Pay Later is set to be discontinued in June 2024 and replaced with access to Affirm loans in Apple Pay as part of iOS 18. Apple Card is also reportedly in limbo as Apple seeks a partner to replace Goldman Sachs.