Apple is reportedly preparing a new iPhone
rental program that’ll be announced alongside the iPhone 14 lineup this year,
and that’s straight from Mark Gurman, one of the most reliable Apple analysts out there!
Yes, that means you’ll be able to rent your iPhone month to month directly
from Apple instead of buying it outright or through your cell service provider.
And yes, unfortunately, that also means that you could be paying for
years and never actually pay off an iPhone in full and own it yourself.
But here’s the kicker.. A lot of people are gonna do it and a lot of people
are actually gonna be very happy about it.. Including myself!
But before I explain the three main reasons why I’m gonna rent an iPhone as well as thousands of
other consumers out there, I’ve gotta let you know why Apple has finally decided to do it right now!
Well, the main reason according to Mark Gurman is that it’s gonna make Apple more money,
and the reason for that is because those who will be renting or leasing their iPhones will
be getting automatic upgrades every single year, whenever the latest iPhone comes out.
And that is a big deal for Apple because the average iPhone user
upgrades their iPhone every three years,
or whenever their screen is cracked or they find the latest iPhone to be enticing enough.
So for Apple, this is gonna be a win-win because they automatically will get a huge
number of preorders instantly, amounting to the number of people on this new rental program.
Mark Gurman made some calculations showing how much money Apple could make
by leasing iPhones at a monthly rate compared to the outright cash price, with Apple making
as much as $1800 off of an iPhone 13 Pro Max at $50/month instead of the regular $1099 price.
Not only that, but Mark Gurman mentioned that Apple can also take the old returned iPhones
and resell them on the secondary market to make extra cash.
So the #1 biggest reason is the fact that Apple can make more money
with this new leasing program, and yes, I know they already have their iPhone upgrade program
that I’m actually currently on right now, but this new rental program will be a lot different
and I’ll explain why in just a minute.
But moving on to the next reason why I think Apple is finally gonna introduce
this rental program this year.. It has to do with the general economic outlook right now.
As many of us know, inflation has been a hot topic recently
with prices of just about everything climbing higher and higher each month.
Gas prices have been climbing. Food prices have been climbing. Service prices have been climbing.
Rent and housing prices have been climbing. In fact, homebuyer affordability has
dropped to its lowest level since 2008. The year-over-year Disposable household income
has fallen more than it ever has in the last 30 years, and that’s all due to high inflation.
Making things worse, Diesel prices have been skyrocketing,
which makes it more expensive for truckers to transport food and goods, and of course,
that cost will be passed down to us, the consumers.
And because of all of this,
consumer confidence of the economy is now down to the lowest level since 2020.
Apple also recently reported their 1st quarter earnings
and mentioned that the supply chain issues in China are impacting sales, and because of that,
they could lose between 4 to 8 billion dollars in sales in the current quarter.
And to top it all off, #recession is now trending on twitter,
and the reason for that is because the US economy shrank in the 1st quarter of 2022,
which means that we’re now officially 50% of the way there in terms of being in a recession.
Now I’m not saying that it’s gonna happen for sure,
but what I am saying is that it could lead to less demand for tech in general, including smartphones.
And that right there is the third reason, lower consumer demand, which Apple analyst and leaker
ming-chi kuo has been warning about for weeks, including global smartphone demand decline.
So what Apple has to do is find a way to make it easier and less expensive for
people to continue upgrading their iPhones, because if we do truly go into a recession,
upgrading your iPhone is the last thing you’re gonna worry about.
And that’s why Apple is introducing this new rental program this year,
especially since rumors are showing that the iPhone lineup is gonna be getting more expensive
because even Apple’s margins are getting squeezed, so they’ve gotta increase prices.
But now, let’s switch over to the three main reasons why I think this totally makes sense
for Apple, and why a lot of people are gonna love this new iPhone rental program, including myself.
First of all, I want to mention that I already am part of Apple’s iPhone upgrade program,
and I love it because I already upgrade my iPhone every year because tech is a
high priority in my life in terms of where I like to spend money, and my smartphone
is the number 1 piece of tech that I use the most throughout my everyday life.
And on top of that, Applecare+ is included
so I get the peace of mind of knowing it’ll be covered if I drop my iPhone.
But I think this new iPhone rental deal will be even better because Apple will make it even less
expensive than the current iPhone upgrade program, which is gonna attract a LOT of customers.
And the big reason that I personally think this makes sense for Apple is that they can
potentially bundle this iPhone rental deal with their own Apple One services bundle
to get people locked into the Apple ecosystem, which means tons of extra services revenue.
And for those who are willing to do that, Apple will sweeten the deal
by throwing in some services completely for free, because they know they’ll more than make
that money up over the years because that customer is locked into the ecosystem.
So imagine paying $45 a month for an iPhone 13, with iCloud, Apple Music,
Apple Arcade and Apple TV+ included, that’s an absolutely killer deal, and that’s why
I personally will LOVE renting my iPhone, since I already plan to upgrade every year.
And yes, Apple will initially be losing money by offering some services for free or at a discount,
but they’ll be locking people into those services, and once they get used to them,
they won’t want to cancel.
And even if they’re on the fence about canceling one of those services, they won’t want to because
it’s part of a bigger bundle with other services that they really care about.
And on the other hand, if someone in the rental program doesn’t really care
for the latest iPhone because the feature differences aren’t that big, they’re already part
of the program so they might as well upgrade anyway, which is obviously good for Apple.
And of course, if things start getting tight for the consumer because of a potential recession,
paying $45 a month for everything including your iPhone
and Apple services is an easier pill to swallow than buying an iPhone for $800 outright.
And that’s exactly why car leases have been getting so popular, because they’re cheaper
month to month than getting an actual loan,
even if it’s not the best and smartest financial choice in the long run.
It just makes it easier on the consumer’s wallet in the short term, which is why I think Apple is
gonna be introducing it later this year. But once again, don’t get me wrong, Apple
is gonna really sweeten the deal and actually make it worth it for people and a pretty dang good deal
if you want Apple’s other services, and Apple is willing to take that initial hit because they’re
counting on eventually making that money back and more through their growing and expanding services
business which by the way has much better profit margins compared to Apple’s hardware business.
But of course, that’s just my opinion, so if you’ve got some other thoughts on this topic,
please let me know down in the comment section below.
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