Why Apple May Shift to a Subscription Model For Both Hardware AND Software
Apple already offers subscription bundles through Apple One. Launched in 2020, Apple One packages together multiple Apple services like Apple Music, Apple TV+, iCloud storage, and Apple Arcade into a single monthly price.
There are three main tiers:
- Individual includes Apple Music, Apple TV+, Apple Arcade, and 50GB iCloud for $16.95 per month
- Family offers those services for up to 6 people for $22.95 per month
- Premier adds Apple News+, Apple Fitness+, and 2TB iCloud for $32.95 per month
While convenient, Apple One is focused on services subscriptions. It does not provide subscribers with Apple hardware or upgrades.
Microsoft and Adobe’s Shift to Subscription
In recent years, major software companies like Microsoft and Adobe have transitioned their flagship products to a subscription model.
Microsoft launched Office 365 in 2011, requiring users to pay a monthly or annual fee to access Word, Excel, PowerPoint, and other Office apps. This replaced the previous model where users could purchase a perpetual license.
Similarly, Adobe moved Creative Cloud to a subscription in 2013. Instead of buying Photoshop, Illustrator, or Premiere Pro outright, users now pay a recurring fee for access.
The subscription model has proven highly profitable for both Microsoft and Adobe. It provides them with a steady, recurring revenue stream rather than relying on users to purchase upgrades every few years.
Potential Benefits for Apple
Apple offering a subscription plan could provide several benefits:
Consistent Revenue Stream
Like Microsoft and Adobe, subscriptions could give Apple a predictable, recurring revenue source compared to one-time purchases. This may help smooth out fluctuations in iPhone and other hardware sales.
Increased User Loyalty
Subscriptions encourage users to stick with Apple services rather than frequently switching between platforms. The longer a user subscribes, the less likely they are to cancel.
Bundled Services
Apple could offer bundles combining hardware, software, and services. For example, a user may subscribe to an iPhone along with Apple Music, iCloud storage, Apple TV+, etc.
Hardware Upgrades
Rumors of an Apple subscription program isn’t new, subscriptions could allow users to regularly upgrade their Apple devices, receiving the latest iPhone, iPad, or MacBook on a yearly basis.
What Could an Apple Subscription Look Like?
If Apple pursues a subscription model, it may include:
- Bundled plans for iPhone, Apple services, support, and upgrades
- Separate subscriptions for individual services like Apple Music or iCloud
- Mac and iPad subscriptions with hardware upgrades every 1-2 years
- iOS and macOS access via a monthly or annual fee
Apple is reportedly developing subscription bundles, but hardware subscriptions are unconfirmed. The shift may begin with services before expanding to other products.
Concerns About the Subscription Model
Despite the benefits, subscriptions also come with drawbacks. Users lose the ability to own and use products indefinitely without recurring payments. If Apple restricts access to iOS, Mac, or Apple services without a subscription, it may receive significant criticism.
However, subscriptions are becoming common across the tech industry. As users grow accustomed to recurring payments for services like Netflix and Spotify, they may gradually accept similar models for hardware and software.
The Path Forward
While unconfirmed, a shift to subscriptions could be highly profitable for Apple. It aligns with recent trends in the tech industry established by Microsoft, Adobe, and others. However, Apple will need to carefully weigh the implications of mandating recurring payments for its products and customers.