CNBC reported yesterday Apple hinted at a subscription fee for iPhones. Apple CEO Tim Cook hinted at the change during yesterday’s earnings call, where the company announced strong fourth-quarter earnings.
Cook didn’t outright announce “Apple Prime” during the earnings call. The rumored subscription bundle would include the iPhone, Apple TV Plus, and Apple Music. However, he didn’t reject the idea of a subscription fee for the iPhone.
“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 also said Apple sees subscriptions as a major growth area.
“My perspective is that we will grow in the future to larger numbers that will grow disproportionately.”
Inevitability and competition
For Apple, the advantages might be too much to ignore. Turning iPhone sales into a subscription model gives the company recurring revenue from its most popular product. A subscription model would also help Apple further push Apple TV Plus and Apple Music.
As CNBC noted, Apple may have already laid the groundwork for an iPhone subscription fee. The company lets you pay for its iPhones on a monthly basis and trade in your older iPhones for new ones.
A subscription to an iPhone would be better suited for those already living in Apple's ecosystem.
During the earnings call, Cook even announced those who use the Apple Card for iPhone purchases receive no interest for 24 months. Alongside the announcement, Cook acknowledged there are customers who are fine with recurring payments.
“We are cognizant that there are lots of users out there that want sort of a recurring payment like that and the receipt of new products on some sort of standard kind of basis. We are committed to make that easier to do than perhaps it is today.”
Then again, will this sway people who weren’t interested in iPhones to begin with? Samsung, Apple’s biggest competitor in the U.S., offers an extremely robust trade-in system for its smartphones, TVs, and computers. As of this writing, you can get the Galaxy Note 10 for $399.99 or $14.58 a month for 24 months with an eligible trade-in.
If nothing else, a subscription to an iPhone would be better suited for those already living in Apple’s ecosystem. They wouldn’t mind paying a recurring fee, even if it means there’s no outright ownership at the end of the tunnel.