Time may be right for Apple as a service, says CIRP

Can Apple turn hardware based sales income into regular revenue?

Apple as a service may finally enter the light, recent reports have claimed. Now Consumer Intelligence Research Partners have joined Morgan Stanley to observe the time may be right for such a service, at least in the US.

Can we rent our Apple lives?

CIRP has engaged in a fairly deep analysis of the current market around Apple products in the US, and thinks that consumers are already primed to join such a scheme.

The research find that iPhone owners already use services such as phone financing, trade-ins, and service subscriptions regularly enough that a large base of Apple’s existing users may be willing to subscribe.

“Based on current consumer behavior, iPhone users are primed to adopt a subscription service that provides an iPhone bundled with useful apps,” said Josh Lowitz, CIRP Partner and Co-Founder.

Almost half already use these services

“Almost half iPhone owners already finance their iPhone purchase, paying monthly for a new phone. And about one-third trade-in their old phone when they buy a new one. So, a significant portion of the user base is accustomed to never owning a phone, instead basically leasing it. Importantly, iPhone users also have grown accustomed to getting a new model every two or at most three years. Apple can easily match these patterns with a program that routinely sends a new phone in exchange for the old one.”

Apple One is the future

“Apple also provides critical apps on a monthly subscription,” said Mike Levin, CIRP Partner and Co-Founder. “Paid iCloud storage has been around longest, and about two- thirds of iPhone owners pay its monthly fee. Apple Music is the paid streaming service that replaced iTunes, and almost half of iPhone owners subscribe in a very competitive streaming music marketplace. Apple TV+, the newer video streaming service, attracts about one-third of iPhone owners after only a couple of years, and in a similarly competitive marketplace. Apple already combines these and other apps and services in its Apple One bundle, so it has experience and an installed base of users that could take up a combined hardware, apps, and services subscription program.”

The best services are distinctive

“Consumers will compare any subscription program to the existing ala carte offerings,” Lowitz continued. “The iPhone Upgrade Program, which launched in 2015, has had limited appeal, as it merely combines existing payment and trade-in options with AppleCare. The most successful subscription services provide new or otherwise unavailable benefits. Amazon Prime delivery is distinct from other delivery options. Costco shopping and Netflix and other streaming video services are only available with a subscription. The challenge for Apple is to create a new subscription service that provides unique value to its customers.”

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