How Apple wants to make even more money from iPhones

As ever more retailers are finding out, monthly subscriptions are more profitable than selling an item once. Hence, Apple is developing a subscription for iPhones.

Another ‘rundle’

A subscription to an iPhone: that is the latest innovation that Apple is working on and that Bloomberg reports about. The success of streaming services and other subscription formulas, where consumers pay monthly for a service rather than buying a product once, has also affected the tech giant from California. The company previously launched Apple One as a ‘rundle’ (‘recurring revenue bundle’): a subscription to all digital services, from iCloud to TV+, for an affordable monthly price.

By the end of this year, such a subscription may also be available for hardware (specifically, the iPhone). Because how can Apple increase the sales of its star product, that already accounts for more than half of all sales? By making expensive devices accessible to more people and by guaranteeing that customers always replace their old device with the latest model.

The ‘rundle’ that Apple is currently developing kills both birds with one stone: the subscription differs from a normal instalment program that would basically charge the purchase price divided by 12 or 24 months (plus fees). On the contrary: the program can run indefinitely, because as soon as a new version is released, users will also be able to exchange their device for the latest version. Apple traditionally releases a new iPhone once a year.

Cheaper than the newspaper

The company does not (yet) want to confirm the news and it is not yet 100 % sure the service really will make it unto the release stage, but investors and investors are already reacting very enthusiastically to the rumour. The system of ‘rundle’ is hot in the consumer goods world, because it gives companies guaranteed monthly revenues and creates a very loyal customer loyalty. Just like with car leasing, cancelling the subscription means losing your device.

Analyst Toni Sacconaghi already suggested such a subscription formula back in 2016: he thought that the iPhone is a bargain compared to Starbucks coffee or a New York Times subscription. “The price of the iPhone is a relative bargain compared to other services consumers are willing to pay.” Companies with a “rundle” also tend to have higher stock market valuations than companies without, NYU professor Scott Galloway analysed.

Want to know more about the ‘rundle’ and why more and more brands and retailers are taking up subscriptions? You can soon read all about it in the new book The Future of Shopping: Re-set Re-Made Re-tail by Pauline Neerman and Jorg Snoeck, which will be published at the end of May.