iPhone Subscription Plan: What Is Apple Prime And How Will It Work?

Apple investors and fans who heard speculations of a model that allows consumers to buy costly iPhones on a subscription basis under a possible Apple Prime model along with many other products may see it happen.

The model may look similar to the hugely popular Amazon Prime which also smartly sells Amazon Prime Video.

Apple Prime can happen, going by the clues thrown up by Apple CEO Tim Cook in his earnings calls with analysts on Wednesday, per CNBC.

Analysts and investors had been envisioning an Apple program like Apple Prime bundling hardware upgrades along with services like iCloud storage, Apple TV+ content for a single monthly fee.

It looks the possible model of Amazon Prime could be an amalgamation of its Apple's existing iPhone upgrade and monthly subscription plans with new add ons.

Transactional model to a subscription model

Switching iPhone sales from a transactional model to a subscription model makes sense from a volume point of view. During the earnings call, analyst Toni Sacconagi asked Apple CEO Tim Cook about the idea of starting a Prime subscription, to which Cook was not lukewarm.

Cook said hardware as a service or a bundle has many takers among customers who view the hardware like that because of the need for upgrades.

“We’re cognizant that there are lots of users out there that want a sort of a recurring payment like that and the receipt of new products on some sort of standard kind of basis and we’re committed to making that easier to do than perhaps it is today,” Cook said.

Prime will be an upgrade of existing nimble programs

The nimble models are already at work. Apple started a program in 2015 making iPhones payable every month with Apple support of warranty and timely upgrades for iPhone 8 etc as part of the deal.

So the iPhone Upgrade bundles Apple’s AppleCare warranty and up-to-date hardware and allows users to move to the newest iPhone with a payment schedule spanning 12 months.

Then there are Apple trade-ins or exchange programs on the lines of auto dealers. Apple went on an overdrive advertising scheme prodding customers to buy a new iPhone from Apple by selling an old phone for a discount on the new model.

Apple also advertised prices in Apple store outlets and marketing materials. Reports say Apple’s trade-in programs are growing fast.

“We also continued to see great results from our trade-in program with more than five times the iPhone trade-in volume we had a year ago,” Apple CFO Luca Maestri said.

Market reaction to iPhone

Meanwhile, Apple’s plan of selling more features for a bigger price, in iPhones that started with the iPhone 10 and expanded to iPhone 11 seems to be giving good results in terms of higher market acceptance.

On September 20, Apple introduced the iPhone 11, iPhone 11 Pro and iPhone 11 Pro Max for sale at different price bands.

Apple had justified higher prices of iPhone 11 that flaunt a wide-angle camera, better battery life and night mode. The latest iPhone also offers a slow-motion selfie, called slofie.

According to Cowen Equity analyst, Krish Sankar iPhone 11 has got a strong reception in the market.

Although Apple did not announce any Apple Prime on Wednesday, Cook has made it clear that it senses the demand and an opportunity ahead. It is bound to boost Apple stock as well.