Apple is reportedly preparing to launch a device-leasing program called Apple Upgrade in the U.S. on July 28, with Klarna providing the financing, according to a Bloomberg report. The plan could shorten upgrade cycles for the iPhone, Apple's biggest revenue line, and make its sales more subscription-like.
Apple is preparing to launch a device-leasing program called Apple Upgrade in the U.S. on July 28, Bloomberg reported this week. If the report holds, the program could push the iPhone toward faster upgrades and steadier, more subscription-like sales.
How the reported program would work
The structure works much like a car lease. Klarna would provide the financing, and enrollment would involve a soft credit check. Leases would reportedly run 24 months for iPhone and Apple Watch and 36 months for Mac and iPad.
During a term, customers could pay the device off early or upgrade to a newer model, and at the end they could keep the device or return it. The program would reportedly replace new enrollments in Apple's existing upgrade and financing options, though some lower-priced models would not be eligible, including the iPhone 16, the entry-level iPad, and the Apple Watch SE. AppleCare coverage would no longer be included automatically.
What leasing could mean for iPhone sales
A lease with a built-in upgrade path tends to shorten the replacement cycle, which can mean more device sales per customer over time. That matters most for the iPhone, which generated $57 billion of revenue in the March quarter, up 22% year over year and a record for the period.
Leasing could also smooth out demand cycles, letting customers upgrade on a schedule rather than waiting for a hardware overhaul. Notably, Apple would gain this without becoming a lender, because Klarna would carry the credit risk while Apple keeps the customer relationship.
Apple has not confirmed any of this publicly, and reported plans can change. But the company's fiscal third-quarter earnings report is scheduled for July 30, two days after the program's reported launch date, when management will likely face questions about what leasing means for the business.
Source: The Motley Fool
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