For years, Apple investors have been speculating on the potential that the Cupertino-based tech giant could someday sell hardware, on a subscription basis. Some people call it Apple Prime after the popular Amazon program. Under the notion of Apple subscription, the Cupertino-based tech giant would bundle hardware upgrade with Apple services like the Apple TV+ content, iCloud storage, and hardware like an iPhone or iPad for a monthly or annual fee.
This effort would convert iPhone sales from a single transaction into a subscription type, possibly raising the stock price without the need to increase product prices or sales dramatically. During the recent Apple earnings call, analyst Toni Sacconaghi inquired about the concept of an Apple subscription. His inquiry was answered by Apple CEO Tim Cook, who instead of killing the idea right there and then answered something like it is already taking effect.
″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.."
So to some degree that exists today." Cook continued, using bullish language, that Apple sees it as a major growth area. "My perspective is that will grow in the future to larger numbers. It will grow disproportionately," he explained.
Apple usually does this by introducing smaller or support programs and services, laying the groundwork for a much larger and strategic move in this particular segment. Four years ago, Apple began allowing consumers to pay iPhones on a monthly basis instead of paying everything at once, adding upgrades and warranty as part of the bundle. The company also heavily advertised trade-ins similar to that being offered by auto dealers.
The program allows customers purchasing a new iPhone from Apple can sell their old iPhone back to Apple and convert it to a discount on the new model they want to purchase. The Cupertino-based tech giant even marketed the iPhone prices after the trade-in. While Apple is marketing the program as part of its environmental campaign, it is also getting the consumers accustomed to the concept of giving up their current iPhone and upgrading to newer models.
Tim Cook announced a new program during the earnings call, which will allow Apple Card users the chance to purchase the iPhone using the card payable for 24 months free of interest. Users who will avail the program will even be entitled to Apple three percent rebates even though they did not purchase the iPhone on cash.
