Apple has prepared a hardware subscription service for iPhones that could launch as soon as the end of this year.
The service would enable customers to buy an iPhone through monthly payments, similar to how users currently subscribe to iCloud.
It will be like selling its hardware as a subscription. This will increase the company’s recurring revenue and could lead to a hike in the stock price. Analysts have long been wary that Apple’s prodigious hardware sales are a “hits business” and believe that increasing predictable subscription revenue could prompt investors to value Apple more highly.
Apple rose over 2% during trading on Thursday when this was announced.
Currently, the company offers multiple ways of paying for the phone monthly, including the iPhone Upgrade Program, which bundles iPhones with a warranty and free upgrades for a monthly fee and financing with the Apple Card.
CEO Tim Cook has told investors to closely watch its services business, which reported $68.4 billion in sales in 2021, growing 27%. Apple’s services business currently includes warranties, services such as iCloud and Apple Music, and sales from Apple’s App Store.
Apple’s iPhone business reported nearly $192 billion in sales over the same period.
“In terms of hardware as a service or as a bundle, if you will, there are customers today that essentially view the hardware like that because they’re on upgrade plans and so forth,” Cook said during an earnings call. “So to some degree that exists today.”