Streaming platforms like Netflix
The planned program would be added to Apple's existing roster of subscription services, such as Apple Music+, Apple TV+, and the company's trade-in plans.
Already, Apple offers a program that gives customers the option to pay around $35 per month for an iPhone with the option to swap in their devices for the newest model when one is released roughly once per year. Under the existing plan, contracts allow customers to pay off their devices over the course of two years. Currently, average Apple users buy a new device every three years, meaning Apple only makes money off of the hardware for two out of three years under the existing plan.
On the other hand, Apple's hardware subscription program would not serve as a pay-to-own plan. Instead, customers subscribe to a device via the App Store or using their Apple ID, with monthly fees varying depending upon the device the customer chooses. The program would also give subscribers the option to update to Apple's newest model, and monthly rates are expected to be lower than the current program.
Along with strengthening Apple's revenue stream, the proposed service could also be a way for the tech giant to avoid "right to repair" rules introduced by the Federal Trade Commission (FTC) in July that require companies to allow their customers to repair the devices they own, or to seek repairs from a third party.
The new rules apply not only to phone-makers but to virtually all manufacturers, including manufacturers of medical devices and cars. The rules are meant to allow consumers to choose someone other than a potentially more expensive official repair center to fix their products.
Apple's program would make it so that consumers don't actually own the devices that they're using, meaning Apple would not be required to allow them to seek cheaper alternatives to official repair services.
Still, in response to the FTC July rules, Apple announced the introduction of a new Self Service repair program for customers, providing access to repair manuals and purchasable tools to fix Apple products. However, experts say that the subscription service is likely to discourage consumers from risking making their own repairs.
This move is in keeping with Apple's track record of attempting to unify all of its services and devices under its own control. Those enrolled in the subscription program would be even less likely to switch to a competitor and may be more likely to upgrade their devices when a new model is released.
Already, the company's control over its App Store is being challenged, and the company is expected to lose its ability to charge its notorious 15-to-30% fee for app developers. Some experts think the proposed subscription program is Apple's idea for a new revenue source in case its App Store profits diminish.
