For years, Apple (NASDAQ: AAPL) has considered selling its iPhones through a subscription model rather than a transactional model, which is what it currently employs.
Now, that notion may become a reality as outlined in a recent earnings call with the company. Through the new model, Apple may bundle its hardware products with its software ones, to offer combo packages that allow customers to pay a single monthly fee. Some of the combinations could include extra iCloud storage or more streaming on Apple TV.
″In terms of hardware as a service or as a bundle, if you will, there are customers today that essentially view the hardware like that because they're on upgrade plans and so forth," CEO Tim Cook said during an earnings call. "So to some degree that exists today."
Apple actually already offers some subscription-based services, such as the iPhone Upgrade Program, which covers iPhone costs for two years. After users finish their first year's payment, they can opt for an upgraded iPhone. The service is more convenient for buyers who upgrade their iPhones every year. Another such program is the iPhone Forever Program by Sprint (S). Through this, Sprint allows subscribers to upgrade to a new iPhone each year. Note that it does not offer warranty or device protection like the iPhone Upgrade Program.
"We're cognizant that there are lots of users out there that want a sort of a recurring payment like that and the receipt of new products on some sort of standard kind of basis, and we're committed to make that easier to do than perhaps it is today," Cook said.
Currently, a program called AppleCare also allows customers to spread out iPhone costs over the course of two years.
The subscription model may solve Apple's commoditization problem, which has worsened as it has had to sell higher volumes of phones at lower prices in order to compete in a frenzied market at the cost of stifled profits.