Apple scraps iPhone subscription service plans

Apple has officially halted its plans to launch a subscription-based service for iPhone hardware, a project that had been under development for the past two years. The initiative aimed to allow customers to subscribe to an annual service that would grant them access to the latest iPhone models, while also providing Apple with a consistent revenue stream. The project, which was reportedly managed by Apple's Apple Pay division, had also been aligned with a 'pay later' scheme, which has also been scrapped.

According to a report by Bloomberg, the iPhone hardware subscription was intended to replace Apple’s existing iPhone Upgrade Program in the U.S., which allows users to pay for a new iPhone over a two-year period. The subscription service was initially expected to launch by the end of 2022 but faced several delays, pushing the launch beyond its anticipated timeline.

A major concern behind the cancellation was the potential regulatory scrutiny the service could have faced from the Consumer Financial Protection Bureau (CFPB), especially regarding the 'pay later' model. The CFPB had previously indicated that companies offering such services would be required to comply with the same regulations that apply to major financial institutions like Visa and Mastercard.

While the iPhone remains Apple’s largest revenue source, contributing over half of its sales in the last financial year, the subscription service could have provided the company with a more predictable revenue stream, while also encouraging customer loyalty. However, Apple has opted to abandon the plan for now, making it the second payment-related initiative to be shelved in 2024, following the shutdown of the Pay Later service in June.

Although the iPhone hardware subscription service is on hold, Apple may reconsider the project in the future, potentially with a new partner to navigate regulatory challenges.