Apple is abandoning the Plan for the iPhone-as-a-Subscription

Apple’s plan to offer a subscription service for the iPhone died before it even started. According to BloombergThe Cupertino company has abandoned a project that would have allowed people to pay a monthly subscription fee in exchange for annual iPhone updates.

Apple has begun to design the scheme to change the way people buy phones in 2022. The theory for the company, according to report from Bloomberg at that time, it was to transform the ownership of the telephone in a model closer to leasing a car. Instead of selling the devices outright or allowing people to pay for them over several years through monthly payments, consumers pay a fixed fee each month for access to the device. When a new iPhone comes out, subscribers can upgrade to the latest model.

The idea behind the now defunct idea was to rope more people into recurring payments and keep people locked into the Apple ecosystem. For many consumers, the functional plan does not change much, other than they could pay a simple monthly fee for the right to update their device. Of course, they will never own the phone they use – but most people are locked into two or three year payment plans however, and since those payments ended, the device has lost much of its value.

These long-term installment-based repayment plans, coupled with a distinct lack of enticing features in the latest iPhone versions, have resulted in a slowdown in people upgrading devices. Turning cell phone ownership into a subscription plan eliminates the inconvenience for consumers to upgrade and get new devices off store shelves. It could also move people who currently pay their telecom carriers for their devices into Apple’s fold, which is likely to upset some telecom executives.

But the subscription concept also ignores a possibly key detail of the consumer experience: people want to keep their stuff. A YouGov survey by 2023 it found that seven in 10 Americans want to hang on to their device for at least two years, and about one in six would keep their phone for five or more years if they could. A Gallup poll found more than half of the respondents said they only upgrade phones when they absolutely need to, either because their current device has stopped working or has become obsolete.

Now, that could change if Apple were to successfully enrich the relationship of consumers with their device. If it’s no longer a phone they own and just a piece of hardware they’re renting, they might be more willing to give an upgrade a shot if it’s going to cost them the same price every month anyway. But for now, iPhone ownership will continue as always: paying a carrier you hate a monthly fee until the phone finally belongs to you.