Apple has launched a new Upgrade leasing program covering iPhones, Apple Watches, iPads, and Macs, run through a partnership with Klarna. Monthly payments start as low as $11.99, and the launch follows a round of price increases on several Apple devices. The program could push customers toward shorter upgrade cycles just as Apple prepares a pricier fall iPhone lineup.
Apple rolled out its new Upgrade leasing program a few days ago, extending device leasing beyond the iPhone to the Apple Watch, iPad, and Mac. Klarna facilitates the leases, handling enrollment, approval, and billing through its own app.
New iPhones will start at $17.99 per month, Apple said in a press release, while an Apple Watch lease begins at $11.99, an iPad at $17.99, and a Mac at $24.99. The iPhone and Watch offer lease terms of 12 to 24 months, with Mac and iPad leases running 24 to 36 months. When a lease ends, customers can upgrade to the newest device, buy it with a one-time payment, or return it.
Price increases came first
The launch follows price increases Apple made across several devices just a couple of weeks earlier, when the cost of some Macs and iPads rose by $200 or more. Apple attributed the increases to surging memory processor costs tied to rising demand from artificial intelligence data centers. The company hasn't raised iPhone prices yet, but is expected to do so once its next iPhone generation debuts in the fall.
Spreading device costs into monthly payments could ease the sting of those increases for buyers while Apple keeps the 39% gross margins it earns on hardware. Apple's market cap stood near $4.9 trillion as the program launched.
Watching the next upgrade cycle
Investors will want to track whether lower monthly payments encourage customers to upgrade more often, since Apple's plan depends on leases converting into repeat purchases. The option could also help sales of Apple's rumored first foldable iPhone, said to carry a 7.8-inch screen and a $2,000 price tag when it launches in September.
Apple's fiscal first-quarter results, covering the end of September through December, will mark the first period long enough to show whether the leasing plan is turning into more device upgrades.
Source: Fool
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