Talking tech since 2003

In its September event, Apple unveiled new iPad's, Apple Watch's, and a brand new subscription bundle called Apple One. Before we go any further I need to explain what's included in Apple One:

There are three Apple One plans. The individual plan costs $14.95 per month and includes Apple Music, Apple TV+, Apple Arcade, and 50 GB of iCloud storage. The Family plan includes everything in the individual plan but offers 200G of iCloud storage. The most expensive plan, Apple One Premier, costs $29.95 per month and in addition all the other features you also get access to Apple News+, Apple Fitness, and 2TB of iCloud storage.

As it turns out, when you do the math, Apple One is a good deal, but it has the potential to be a great deal. Here's how I'm thinking about it: if Apple really wants to build a subscription business, the iPhone is the perfect product to build it on top of. We've been hearing for a while now that Apple's massive iPhone sales numbers would catch up to them – and we even saw it during January 2019's earnings call when Tim Cook had to revise the company's earnings guidance. In the letter, Cook wrote:

In addition, these and other factors resulted in fewer iPhone upgrades than we had anticipated.

At this point in time the U.S. trade war with China was just heating up and there was growing economic uncertainty. Cook went on to write:

While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.

I want you to focus in on the last few points:

Fewer carrier subsidies and price increases

This is a telling thing for Tim Cook to say, it's essentially as if he's coming out and stating that they priced the iPhone too high, especially when things like carrier subsidies don't exist anymore to obfuscate the actual price.

Battery replacements

The comment about battery replacements is also interesting because it highlights the fact that people may be opting for a battery replacement over a purchasing a brand new iPhone.

Now, if we fast forward to today, we're battling a pandemic with little to no federal leadership, the economy is in shambles, and Apple still needs to find a way to drive sales. How can they do it?

iPhone as a Service

Apple already has the iPhone Upgrade Program, but it's not that great. Bundling an iPhone with Apple One would enable Apple to have even further control on all sides of the business: hardware, software, and services. That's their favorite strategy – providing the hardware, software, and now services, for customer's in a closed environment.

How would Apple One + iPhone work?

Ideally, this is how I would like to see an Apple One with iPhone subscription work:

  • You would get everything in the Apple One Premier subscription.
  • You would get to select one of the latest iPhones (this would affect the final price of your monthly subscription).
  • You would get to reserve new iPhones and pre-order at a time when is conveinent for you. This would be gamechanging for me.
  • The subscription would include AppleCare+.
  • Make monthly (interest free) payments via Apple Card.

It doesn't seem like such a crazy idea, especially when you consider that Apple recently started allowing customer's to pay for its products (iPads, Macs) with monthly payments via Apple Card. I'd even venture a bet that the introduction of the Apple Card back in March 2019 was in preparation for an eventual iPhone subscription service.

What would pricing look like for Apple One + iPhone?

I took a look at what it costs per month to buy an iPhone 11 Pro and Pro Max currently via the Apple website – depending on which model and storage choice you make, it ranges from $41.62 to $60.37 per month – and I think if Apple introduced an Apple One plan with iPhone it should be priced around the $60 to $75 per month mark. Obviously it depends which model and storage you end up choosing to determine where on the spectrum you'll end up.

For a iPhone 11 Pro with 64Gb of storage, the price is $41.62 per month, which after 12 months comes out to approximately $500. If you were to buy Apple One Premier that would run you another $29.95 or $360 for 12 months. That's a total of $860 per year for your iPhone + all Apple services. If Apple offered an Apple One + iPhone subscription with the same phone for $60 per month that would net them $720 and give customer's a discount of $140 per year.

If you do the same math with the top of the line iPhone 11 Pro Max with 512GB of storage it looks like this: approximately $725 per year, plus $360 for Apple One Premier comes to $1,085 without my proposed iPhone subscription. With my proposed iPhone subscription it comes to $900 per year. That would be a savings of $185.

Why Apple should do this

We may be heading towards another recession (if not worse) and a move like this will not only help Apple sell more iPhones, it'll also likely increase usage of their services and on top of that they're getting people to signup for their credit card. It's literally a win, win, win (who got my The Office reference there?) for them and a nice savings for consumers. Oh and let's not forget, Apple will be able to sell all returned iPhones as refurbished products which will also be helpful to them.

What do you think? Would you buy a subscription to an iPhone? How much would you pay per month?


Comments

Sign in or become a BestTechie member to join the conversation.
Just enter your email below to get a log in link.

Subscribe to BestTechie Plus

You've successfully subscribed to BestTechie
Welcome back! You've successfully signed in.
Great! You've successfully signed up.
Your link has expired
Success! Your account is fully activated, you now have access to all content.