Apple has scrapped a project to set up a new hardware 'subscription' service for the iPhone, according to a report. The purported iPhone hardware subscription programme was in development for at least two years, and was designed to allow customers to keep upgrading to a new model every year, while ensuring a steady stream of revenue for the Cupertino company. The firm's Apple Pay division was reportedly in charge of the project, alongside a 'pay later' programme that was also scrapped.
iPhone Subscription Service Was in Development Since 2022
Bloomberg's Mark Gurman reports that Apple has stopped efforts aimed at launching an iPhone hardware subscription service — a project aimed at offering a new iPhone model to customers who paid an annual subscription fee to the company to get access to the latest hardware from the company.
The project faced multiple delays since it was started two years ago — it was expected to be introduced by the end of 2022, but multiple setbacks resulted in the service being delayed by more than a year, according to the publication.
The company was also reportedly concerned that the project would face scrutiny from the Consumer Financial Protection Bureau (CFPB) that previously stated companies offering 'pay later' services would have to adhere to regulations that applied to firms like Visa and Mastercard.
Apple already offers an 'iPhone Upgrade Program' in the US that allows users to pay for a new iPhone over two years, and the now-scrapped iPhone subscription project was expected to replace this programme, as per the report.
The iPhone is already the largest contributor to Apple's revenue, making up just over half of all of its sales in the previous financial year, according to company reports. A subscription programme could have ensured a steady flow of revenue for the iPhone maker, while keeping customers from switching to other smartphone brands.
This is the second payment-related project from Apple to be shuttered in 2024. In June, Apple announced that it was winding down Pay Later, which was created in partnership with Goldman Sachs and Mastercard to rival US fintech Affirm. Pay Later was introduced a year ago and allowed customers to make a purchase worth up to $1,000 (roughly Rs. 85,100) and pay it off over four instalments. Apple could still bring back its iPhone hardware subscription project by working with a new partner, according to the report.
