Apple is postponing its plans for a monthly iPhone subscription, Bloomberg reports. It was first reported that the company was exploring the possibility of introducing a hardware subscription in 2022, but, like the “buy now, pay later” Apple Pay Later product, it seems that this proved to be too problematic.
Hardware subscriptions are rumored to work similarly to existing options like the iPhone Upgrade Program or Apple Card Monthly Installations, where you pay for a new phone or other Apple device in monthly installments and in some cases get the option to upgrade to a new device without changing your subscription fee. Unlike these payment methods, which involve a one-time loan from Citizen One or Goldman Sachs, Apple’s subscription could be managed through your Apple account and use any payment methods you already had connected.
Apple calculated that if it paid the cost of the iPhone directly, people would upgrade their devices more often and increase the company’s recurring revenue. The problem is that, similar to Apple Pay Later, which allowed Apple Pay purchases to be split into four smaller payments, a hardware subscription could require Apple to “follow the same rules as credit card companies,” Bloomberg writes. This is additional scrutiny that the company did not want to invite.
There’s also the potential strain that a hardware subscription could put on Apple’s relationship with carriers. You can buy the iPhone 16 from T-Mobile or Verizon with an installment plan, which may technically be different from a subscription, but certainly feels like a subscription when you pay monthly.
Apple’s hardware subscription has never been officially announced, but it reflects what could be a bigger departure from the financial services headache. Apple Pay Later was shut down in June 2024 and replaced with access to Affirm loans in Apple Pay as part of iOS 18. Apple Card is also reportedly in limbo as Apple looks for a partner to replace Goldman Sachs.
