Apple to offer latest iPhone on a 'Pay as you go' subscription possibly to fuel demand

Consumers could soon subscribe to an installment plan to use the latest Apple iPhone instead of purchasing the premium iOS handset. Apple seems to be considering a monthly subscription for its iPhone and other gadgets, presumably to fuel demand, and ensure it can keep production levels high.

A Bloomberg report indicates Apple seems to be working on a subscription model for the company’s smartphones, and possibly, other high-end electronics. Incidentally, this does not mean that consumers would actually own the devices after they have paid all the installments.

Under the as-yet-unannounced subscription service, customers wouldn’t actually own the Apple product they subscribed to. Instead, they would pay a monthly fee to use Apple products. This is similar to a tenant paying rent to occupy a house or an apartment. Although Apple hasn’t offered any details or even indicated it is working on a subscription model, reports indicate the iPhone maker could launch the service next year.

Apple already has AppleCare and Apple One plans. Apple One lets users sign up for multiple subscriptions at a discount. Meanwhile, AppleCare is the company’s warranty program, and AppleCare+ offers extended warranty and technical support plans for their devices.

It is quite likely that consumers could simply approach Apple and avail an AppleCare or Apple One plan which includes a brand-new iPhone on rent. Consumers would subscribe to hardware with their Apple ID or App Store account. As mentioned above, this wouldn't be a payment installment plan, wherein, the monthly fee is a portion of the price of the product split up into 12- or 24-month increments.

The fee would depend on the device the consumer chooses. However, subscribers would obviously have the option to exchange their existing iPhone for the latest model upon release. Apple usually releases a new iPhone every year. Hence, under the subscription model, a consumer could merely head to an Apple Store and exchange their handset for a new iPhone.

Apple iPhones have steadily increased in price, they are firmly in the premium category. Previous studies have indicated that iPhone owners are holding onto their devices for a lot longer than usual. This means sales of new models could be getting negatively impacted. The subscription model could help Apple keep production high by fueling demand. Moreover, such a service could become a loyalty program, preventing users from switching to an Android smartphone.

Source: Bloomberg