Apple decides to scrap iPhone subscription plan before it ever launched
The last time we checked in on Apple's plan to create a subscription service for new iPhone models it was early last year and at the time, Bloomberg's Mark Gurman said that Apple was still working on the plan which he said would be launched "eventually." Fast forward to today and Gurman had something completely new to say about the iPhone subscription plan that Apple was still working on.
Citing people familiar with the plans, Gurman says that Apple has stopped work on developing the iPhone subscription service. The idea was to allow consumers to subscribe to the service and pay a monthly subscription fee that would allow them to receive a brand-new iPhone each year. The team that was working on the concept disbanded and was assigned to other projects that Apple is working on according to people in the know who asked to remain anonymous because the work was confidential.
While the project was still in development, it was overseen by the Apple Pay group. The latter team earlier this year also closed an in-house "buy now, pay later" service that allowed shoppers to pay off purchases over several months. But now Apple is directing shoppers to use third-party installment plans instead.
When Bloomberg News first reported in 2022 about Apple's plan to launch an iPhone subscription service, Apple hoped to start it at the end of that year. But various issues including software bugs led Apple executives to push back the start of the service before it eventually decided to scrap it. The plan would have allowed customers buying an iPhone to have a monthly fee billed to the account used to pay for apps and subscription services. Each year, the customers would receive the latest iPhone model.
Apple already has an Upgrade Program that allows subscribers to get a new iPhone every year. | Image credit-Apple
The subscription service would have been handled in-house by Apple and the loans provided to buy iPhones would have been floated by the company. Testing it out earlier this year, Apple allowed members of its Apple Pay team to try it along with those working on App Store billing and Apple's online store. Apple already runs the iPhone Upgrade Program which divides the cost of an iPhone over two years. After making 12 monthly payments, subscribers can trade in their current iPhone for a new model.
Considering that the iPhone is Apple's most important product accounting for over half of the company's annual revenue, the tech giant hoped the subscription plan would increase sales of the device which would generate additional recurring monthly revenue. Increasing iPhone sales would lead to increasing purchases of Apple Services. With development of the iPhone subscription plan halted, Apple might start increasing how often it promotes the iPhone Upgrade Program.
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