Earlier this week, the consumer electronics industry went into a tizzy following a report claiming that Apple was mulling ahardware subscription service. To put it simply, Apple wants to start a Netflix-like service, but one that dishes out iPhones and Macs instead of films and TV shows. Actually, those too, but more on that later. Apple, however, plans to do more than just rent its polished hardware.
Apple will reportedly bundle its services such as Apple One and Apple Care with its subscription service, adds the updatedBloombergreport. If all goes well, Apple will launch the service later this year. Interestingly, analyst Toni Sacconaghipitched the ideaback in 2016, pushing it as the strategy that could make Apple atrillion-dollar company. Apple is now hovering around the $3 trillion market cap without implementing that trick, but it still sounds like a compelling proposition.
A rental that’s all about the brand
A subscription-based model for pushing hardware sounds like just another moneymaking move by Apple. But it’s hard to ignore the rental appeal here. Apple is essentially hawking a service that will allow interested folks to lease an iPhone and test drive it for a while by paying a small fee for temporary ownership.
I pitched the imaginary (for now) Apple hardware subscription service to Gursakhi Miglani, a student pursuing a master’s degree in clinical psychology. She wasn’t particularly psyched about renting an iPhone due to theclosed software ecosystem, but expressed willingness to rent a Mac because of the fluid software experience and great battery life. “I can already imagine a lot of my classmates jumping at the idea of briefly leasing the latest iPhone and flaunting it all over social media,” Miglani added.
It’s not hard to imagine that there’s already a demographic of users — especially the social media savvy younger generation that loves its iPhones — ready to get their hands on an Apple product long enough to garner some clout on Instagram and Snapchat. Blue-collar workers are not immune to the charm either, and so is the case with celebrities. There’s a reason why a ton of iPhone accessories leave a cutout to show that coveted Apple logo, especially on iPhones.
It’s not a hypothetical concept, however.Duke University researchfrom all the way back in 2008 poured it all in the title itself — Logo Can Make You Think Different. Martin Lindstrom, the author ofBrandwashed, cherrypicked Apple as the perfect example of brandwashing, a portmanteau of brand and brainwashing. In a 2019 opinion published inThe New York Times, Lindstrom explained the cult following Apple has built around its products. In another story forFast Company, he attributed Apple’s appeal to sleek hardware and being sociable as a brand.
Well, it’s about the services too
An iPhone is not just about the hardware, but the sum total of fast innards and rewarding services.The best examplehappens to be iMessage, especially in the U.S. And even if Apple extends the services beyond its own hardware pool, it restricts some of the cool capabilities. Take for example Spatial Audio with Dolby Atmos, which is limited to the AirPods line via Apple Music.
Apple’s services, on their own, offer good value, even if they don’t beat each of their respective rivals. Apple Fitness+ has been a huge success, and itsApple TV contentis now competing for top entertainment industry honors. In 2022 alone, Apple got six Academy Award nominations, withCODAgunning forBest Picturehonors.
WithiCloud+, Apple offers some convenient tools such as Hide My Email,Private Relay, and Home Kit Secure Video to its privacy-conscious audience. All the aforementioned services are doled out as part of theApple Onebundle, which Apple intends to offer with its hardware subscription service.
A home for the old and refurbished
But is the market ready for an Apple hardware subscription service? To get the answer, I reached out straight to the other side — the seller. Sunil Motwani, the owner of an authorized Apple outlet that has been selling Apple hardware in an upscale region of New Delhi since the iPhone 3GS days, has mixed hopes for Apple’s hardware subscription plans.
Motwani says Apple gadgets, especially iPhones, are already available with aggressive schemes such asfinancing at zero interestrates, while the iPhone upgrade plan is also a less-taxing way of owning Apple’s latest phones. Or a Mac, for that matter. And despite their high aspirational value and popularity among the new generation, most people would actually want to own the device instead of renting it for a few months.
New Apple hardware also comes at a steep price. But there is definitely a market that wants to experience the software ecosystem, without caring much about the latest hardware tricks. “If Apple focuses on refurbished units and previou- generation iPhones for hawking its hardware subscription service,” Motwani noted, “it can give users a taste of its brand without facing any supply issues and pushing away interested buyers with a sky-high rental price.”
Diving deeper into the economy of a hardware subscription service, Motwani added that there’s always the risk of damaging the product and paying a steep price for it. Apple will want to play it safe with that scenario as well, which could end up ballooning the price even further. As per Bloomberg’s report, Apple will likely tackle that risk, for itself and the customer, with an attached Apple Care element to the subscription service.
Apple can win in many ways
Apple commands a lion’s share of the market in regions like North America and China, and in s growing market like India, itgrew by 48%last year. Apple is poised to start making itslatestiPhones in India starting next month, and per analyst estimates, the relatively affordableiPhone SE 3will alone drive 25% of the net shipments this year.
In markets like the U.S.,more users go for financinginstead of paying a phone’s full price in one go, and the trends are not too different elsewhere. So a hardware subscription strategy won’t really be an alien concept. In developing markets, price happens to be thestrongest variablein influencing a person into buying an iPhone. — more than design, feature, and even brand image.
