Technology

Apple Is Reportedly Preparing an iPhone Subscription Service That Could Launch This Year

Mike Segar | Reuters
  • Apple is preparing a hardware subscription service for iPhones that could launch as soon as the end of this year, Bloomberg News reported on Thursday.
  • The move would represent the culmination of a longtime Apple investor desire to see the company sell its hardware as a subscription, which would boost recurring revenue and could lead to an increase in the stock price.

Apple is preparing a hardware subscription service for iPhones that could launch as soon as the end of this year, Bloomberg reported Thursday.

The service would allow customers to buy an iPhone through monthly payments, similar to how users currently subscribe to iCloud, according to the report. Apple declined to comment.

The move would represent the culmination of a longtime Apple investor desire for the company to sell its hardware as a subscription. Doing so would boost recurring revenue and could lead to an increase in the stock price. Analysts have long been wary that Apple's prodigious hardware sales are a "hits business" and believe that increasing predictable subscription revenue could prompt investors to value Apple more highly.

Apple rose over 2% during trading on Thursday.

Apple already offers several methods to pay for iPhones on a monthly basis, including the iPhone Upgrade Program, which bundles iPhones with a warranty and free upgrades for a monthly fee, and financing with the Apple Card.

Apple execs including CEO Tim Cook have told investors to closely watch its services business, which reported $68.4 billion in sales in 2021, growing 27%. Apple's services business currently includes warranties, services such as iCloud and Apple Music, and sales from Apple's App Store.

Apple's iPhone business reported nearly $192 billion in sales over the same period.

In 2019, Cook was asked during an earnings call whether Apple would consider a hardware subscription. He didn't shoot down the idea and suggested that Apple was working on similar products and something like it was already in 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," Cook said during an earnings call. "So to some degree that exists today."

Read more on Bloomberg.

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