Apple is shelving its plans to offer the iPhone for a monthly subscription, Bloomberg reports. The company was first said to be exploring a hardware subscription in 2022, but like the company’s “buy now, pay later” product, Apple Pay Later, it seems like it ultimately proved too problematic.
The hardware subscription was rumored to work in a similar way to existing options like the iPhone Upgrade Program or Apple Card Monthly Installments, where you pay off a new phone or other Apple device with monthly payments, and in some cases get the option to upgrade to a new device without changing your subscription fee. Unlike those payment methods, which apply your payments to a one-time loan from either Citizen One or Goldman Sachs, Apple’s subscription was going to be managed through an Apple account and use whatever payment methods you already have connected.
Apple’s expectation was that if it fronted the cost for an iPhone directly, people would upgrade more often and increase the company’s recurring revenue. The problem is that much like Apple Pay Later, which let you split Apple Pay purchases into four smaller installments, the hardware subscription might have required Apple to “follow the same regulations as credit card companies,” Bloomberg says. That’s extra scrutiny the company didn’t want to invite.
There’s also the potential strain a hardware subscription could put on Apple’s relationships with carriers. You can buy an iPhone 16 from T-Mobile or Verizon with an installment plan that might be technically different from a subscription, but definitely feels like one when you’re paying monthly.
Apple’s hardware subscription was never officially announced, but it reflects what could be a larger retreat from the headaches of financial services. Apple Pay Later was shut down in June 2024 and replaced with access to Affirm loans in Apple Pay as part of iOS 18. The Apple Card is also reportedly in limbo as Apple searches for a partner to replace Goldman Sachs.
This article originally appeared on Engadget at https://www.engadget.com/mobile/smartphones/apple-is-reportedly-giving-up-on-plans-to-turn-the-iphone-into-a-subscription-223540728.html?src=rss
