Report: Apple has a large base of users that would adopt an iPhone subscription service.

Apple is planning a new hardware subscription service that would allow customers to “subscribe” and receive an iPhone, iPad, and maybe other  devices as part of their subscription, reports Bloomberg. Consumers would pay a monthly fee to use an iPhone bundled with Apple apps and services and would trade-in their phone periodically.

Consumer Intelligence Research Partners (CIRP) has analyzed consumer behavior for subscription-related services, including phone purchase financing and trade-in rates, and use of Apple services and apps. Based on this analysis, CIRP finds iPhone owners use these services frequently enough that Apple has a large base of users that could adopt an iPhone subscription service. 

Among these services, almost half already finance their iPhone purchase, two-thirds use paid iCloud storage, and almost half subscribe to the Apple Music streaming service.

“Based on current consumer behavior, iPhone users are primed to adopt a subscription service that provides an iPhone bundled with useful apps,” says Josh Lowitz, CIRP partner and co-founder. “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.”

Mike Levin, CIRP partner and co-founder of the research group,adds: “Apple also provides critical apps on a monthly subscription. Paid iCloud storage has been around longest, and about two- thirds of iPhone owners pay its monthly fee. Apple Music is the paid streaming service that replaced iTunes, and almost half of iPhone owners subscribe in a very competitive streaming music marketplace. Apple TV+, the newer video streaming service, attracts about one-third of iPhone owners after only a couple of years, and in a similarly competitive marketplace. Apple already combines these and other apps and services in its Apple One bundle, so it has experience and an installed base of users that could take up a combined hardware, apps, and services subscription program.”

Lowitz says the 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, he adds.

CIRP bases its findings on its survey of US Apple customers that purchased an iPhone, iPad, Mac, or Apple Watch as of December 2021.