The news: Apple is working on offering a subscription service for its hardware, including its iPhone models, per Bloomberg.
Why this could work: By implementing a subscription model for its physical products, Apple can generate steady—and lucrative—revenues that could offset any losses should the company be required to open up its App Store to alternative payment methods, as some governments have begun requiring.
- The move could also help reverse weakening consumer demand and encourage shoppers to buy directly from Apple instead of through their mobile carriers or other third-party retailers, maximizing the company’s profits.
- Apple is considering bundling the hardware subscription service with existing offers like AppleCare and Apple One, which could be a differentiator for shoppers torn between purchasing through local retailers or going straight to the source.
Subscriptions take hold: The subscription model has gained popularity lately, not least because it guarantees companies recurring revenues and access to a dedicated group of customers, many of whom might be persuaded to spend more on other products.
- During the pandemic, with product shortages making it difficult to source key household products, many consumers turned to subscription services to provide steady access to necessities.
- The average US consumer now has subscriptions with five retailers, per a survey by PYMNTS and sticky.io. And shoppers are largely sticking with them: Only 14% say they plan to reduce the number of subscriptions, while 51% are planning to add more.