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Why iPhone subscription plans make sense

March 25, 2022, 4:56 PM UTC

Love your current iPhone? It might be the last one you ever own.

Bloomberg scribe Mark Gurman reported Thursday that Apple might soon roll out a hardware subscription service, in which customers would essentially lease their devices rather than buy them outright. Gurman said the subscription plan could debut by the end of 2022, though he cautioned that nothing is set in stone.

“The idea is to make the process of buying an iPhone or iPad on par with paying for iCloud storage or an Apple Music subscription each month,” Gurman wrote. “…The program would differ from an installment program in that the monthly charge wouldn’t be the price of the device split across 12 or 24 months. Rather, it would be a yet-to-be-determined monthly fee that depends on which device the user chooses.”

For Apple, already the world’s largest company by market cap, the shift to hardware leasing brings all kinds of benefits.

If the price point is right, the move could entice customers to pony up for newer iPhones, iPads, and Macs more frequently, rather than holding on to older devices. Those three brands still accounted for $259 billion in revenue last fiscal year, or 71% of Apple’s total haul.

Apple, in turn, could gain a stronger foothold over repair and resale markets, further cutting out third-party vendors that fix, refurbish, and sell old devices. For evidence of Apple’s ruthlessness on this front, look to this Apple agreement with Amazon in 2018, which essentially wiped out mom-and-pop resale businesses.

Perhaps most importantly, Apple could put together countless bundle configurations with its hardware and fast-growing service offerings (Apple Music, Apple TV+, Apple Fitness+, iCloud+, etc.). The combination could help boost its streaming, fitness, and gaming services, taking away market share from competitors like Google, Spotify, and Netflix

In a February earnings call, Apple CFO Luca Maestri said the company’s number of paid subscriptions across all services jumped 27% in the past 12 months, reaching 785 million. While Apple doesn’t report profit margins for each of its service units, the gross margin for all services (which includes the App Store and advertising) reached an eye-popping 71% in fiscal 2021.

The shift to a hardware subscription model looks like a no-brainer for Apple, but a few big questions remain unanswered: How much would it cost? How often could customers upgrade their equipment? Would leasing become an option, rather than a requirement?

Until Apple offers more details, tech observers will have to rely on watching the results of a similar plan launched last October by Google, called Pixel Pass. 

In that deal, customers get a new Pixel phone every two years, 200 gigabytes of cloud storage, maintenance service, and access to the company’s streaming video, music, and app store offerings. The monthly fee: $45 or $55, depending on the preferred phone. (Unlike the purported Apple plan, Pixel Pass subscribers get to keep their phones.)

Google officials haven’t commented on the early results of Pixel Pass or disclosed subscription totals to date. But the coming months bear watching to see whether Google trumpets the program or quietly downplays it.

If Apple ultimately deploys a hardware subscription service at a palatable price, under the right conditions, the move certainly shapes up as a win-win for the company and its customers. 

Apple squeezes more money out of its loyal base, taking advantage of its vast array of devices and services. And consumers get more value out of their Apple products while paying a simple monthly fee.

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Jacob Carpenter


Finally, a deal. European Union officials reached a landmark agreement Thursday on major tech reforms targeting the industry’s richest and most powerful companies that widely oppose many of the mandates, POLITICO Europe reported. The EU’s Parliament and Council, its two primary legislative bodies, announced a deal on the Digital Markets Act after years of negotiations between European policymakers, who widely agreed that global tech giants create an anti-competitive landscape for smaller companies. The legislation limits personal-data sharing, forces operating system owners to allow the download of apps outside of their respective app stores, and orders messaging services to interoperate with smaller platforms, among other provisions.

Averting a data crisis. The U.S. and European Union allayed the fears of Meta, Google, and other tech companies by striking a deal Friday that allows American firms to continue transferring data about Europeans across the Atlantic, The Wall Street Journal reported. The agreement, announced by President Joe Biden and European Commission President Ursula von der Leyen, follows a ruling by the EU’s top court that an earlier data-sharing pact violated European privacy laws. While the two sides released few details about the updated agreement, an industry association representing many large American tech firms said the terms “restore legal certainty" for businesses sending data from Europe to the U.S.

A symbolic gesture? The Justice Department announced indictments of four Russian officials accused of carrying out cyberattacks against critical infrastructure systems across the globe, a disclosure partly designed to raise awareness of Russian hacking capabilities amid the federation’s invasion of Ukraine, The Associated Press reported Friday. Federal officials said the four Russians, none of whom are in custody, launched hundreds of cyberattacks over the past decade. The hackers went after a nuclear power plant in Kansas and a petrochemical facility in Saudi Arabia, among other targets, federal prosecutors said.

Getting a new boss. Netflix continued its push into gaming Thursday with the announcement of its plans to acquire Boss Fight Entertainment, a small Texas studio with about 130 employees, The New York Times reported. The purchase would mark Netflix’s third gaming studio acquisition in the past seven months, during which the streaming company bought Night School and Next Games. Netflix hopes to diversify its business by building a library of mobile games, some of which are built on characters and storylines from its television series.


A recipe for trouble. Of the many tech companies struggling through a market downturn, Pinterest ranks among the hardest-hit, with its share price tumbling 62% year-to-date. For that, insiders place a fair share of blame on the indecisive and slow-moving nature of CEO Ben Silbermann, The Information reported Friday. Interviews and documents show high-ranking top employees have grown frustrated with Silbermann’s deliberate pace when it comes to acquisition negotiations and company-wide directives, contributing to the departure of about 10 Pinterest executives. 

From the article

Pinterest now finds itself in a more delicate moment than it has faced in the past. Active user growth is slumping at the service and its stock price has plummeted 69% from a high last April, compared to 41% and 45% for Snap and Twitter over that same period, respectively.

The company is turning to new areas to help it grow—courting creators and stepping up its shopping business. But in those areas, Pinterest faces fast-moving, tenacious competitors like Instagram and TikTok.


ApeCoin is just the beginning: Bored Ape Yacht Club has big plans to enter the metaverse, by Taylor Locke and Marco Quiroz-Gutierrez

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VPN CEOs are making some services free in Russia because Russians have no way to pay, by Grady McGregor

Elon Musk’s wildest predictions about the future, some of which have come true, by Carmela Chirinos

Putin’s war is disrupting crypto’s fantasy of stateless money, by Paul Blustein


Who needs Paris? Forget the mall. The hottest new (virtual) outfits can be found at Metaverse Fashion Week. As CoinDesk reported Thursday, dozens of top clothing designers will debut non-fungible token collections of clothing and accessories in Decentraland’s four-day fashion show. The impressive lineup of participating brands—Dolce & Gabbana, Tommy Hilfiger, Forever 21, Elie Saab, Perry Ellis, among others—reflects the industry’s growing interest in staking out territory in the infant metaverse. While some companies will sell NFTs, others are using the event to show off digital replicas of tangible designs.

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