Report: Customers ready for a hardware subscription service from Apple

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Report: Customers ready for a hardware subscription service from Apple

Source: Christine Romero-Chan / iMore

Last week, it was reported that Apple is planning to launch a hardware subscription service for the iPhone and more of the company’s devices.

Analytics firm CIRP (via 9to5Mac) has put together a report that, after looking at the data, seems to confirm that iPhone owners are totally game for a hardware subscription service. Mike Levin, CIRP Partner and Co-Founder, said that such a program could be a potential win over the company’s existing iPhone Upgrade Program.

“Consumers will compare any subscription program to the existing ala carte offerings. The iPhone Upgrade Program, which launched in 2015, has had limited appeal, as it merely combines existing payment and trade-in options with AppleCare. The most successful subscription services provide new or otherwise unavailable benefits. Amazon Prime delivery is distinct from other delivery options. Costco shopping and Netflix and other streaming video services are only available with a subscription. The challenge for Apple is to create a new subscription service that provides unique value to its customers.”

The report went on to say that a large chunk of iPhone customers already essentially lease rather than own their iPhone, making it a logical step to jump into a truly subscription-based program rather than a lease-to-own program.

“Based on current consumer behavior, iPhone users are primed to adopt a subscription service that provides an iPhone bundled with useful apps,” said Lowitzr. “Almost half iPhone owners already finance their iPhone purchase, paying monthly for a new phone. And about one-third trade-in their old phone when they buy a new one. So, a significant portion of the user base is accustomed to never owning a phone, instead basically leasing it. Importantly, iPhone users also have grown accustomed to getting a new model every two or at most three years. Apple can easily match these patterns with a program that routinely sends a new phone in exchange for the old one.”

In addition to the iPhone, many are hopeful that Apple may open up this subscription service to its other devices. What seems very likely is that Apple will bundle its hardware with its services – essentially combining the iPhone Upgrade Program and Apple One into one subscription price. For those who always upgrade to the latest and greatest that the company offers, it would be a natural fit.

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