Originally slated for launch at the end of 2022, Apple’s iPhone subscription service faced numerous delays before being discontinued altogether. The program encountered software problems and regulatory concerns that ultimately hindered its progress. The proposed subscription service aimed to revolutionize how customers acquired iPhones. Instead of outright purchases or installment plans, users would pay a monthly fee linked to their Apple accounts. This fee would allow subscribers to upgrade to the latest iPhone model each year. The approach mirrored the model of app subscriptions, offering flexibility and convenience. And what will the impact of this be on the secondary market?
Apple’s in-house financial structure
The service’s financial backbone relied on Apple’s in-house infrastructure, utilizing loans provided by the company itself. Similar to the defunct Apple Pay Later initiative, this program emphasized internal control over financing. Apple’s Pay group, led by Jennifer Bailey, collaborated with teams from App Store billing and the online store to develop the project. Earlier this year, Apple tested the subscription service internally with employees in its Pay group. Despite initial optimism, the initiative was plagued by challenges. The delays, attributed to technical and regulatory hurdles, forced Apple to abandon the project. The teams working on the subscription service have since shifted to other priorities within the company. Apple already operates the iPhone Upgrade Program, which spreads the cost of an iPhone over two years. This program allows users to trade in their current devices for new models after 12 monthly payments. The subscription service would have built upon this framework by offering even greater flexibility through annual upgrades.
Secondary global mobile market impact
Apple's decision to discontinue this program will likely affect the supply of relatively young used iPhones, as the plan involved swapping devices after just one year. However, we believe the market impact will be minimal since the service was not expected to gain widespread popularity. Only a niche group of consumers would have chosen this Apple plan. Moreover, those still interested in a similar option can easily switch to one of the existing carrier programs, ensuring no significant disruption.
Conclusion
Apple’s decision to discontinue its iPhone subscription service underscores the complexities of launching innovative financial offerings. While the project’s vision was ambitious, execution proved challenging. The company’s existing programs, like the iPhone Upgrade Program, continue to provide options for users seeking device upgrades. And impact on global secondary mobile market will be close to none.
Market
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