Just how far is Apple prepared to go in its transformation from product manufacturer to service supplier?
Comments by Tim Cook during an interview suggest Apple is considering launching a subscription service for its smartphones, a move that would be a fundamental step in the transition from consumer product to service, as well as providing a steady revenue stream, and perhaps changing our relationship with hardware in the consumer electronics markets.
The idea is simple and makes sense: offer iPhones under a de facto leasing system, whereby in exchange for a monthly payment, devices are exchanged for new models. Such a system already exists in the business world, where company rent their computers, replacing them regularly with more powerful machines, were it to take off in the consumer sector could see greater homogeneity, as well as helping with recycling and reusing materials, which would greatly enhance Apple’s green credentials.
For consumers, this is undoubtedly the best way to keep our smartphones permanently updated, as well as accessing the latest models. For Apple, the approach would likely translate into greater customer loyalty. Throw the added value of Apple’s commitment to privacy into the mix, and the idea could definitely appeal to a substantial number of people.
Apple already has two-year credit plans that allow customers to trade their old model in for a new one after a year, given that we are now seeing “new” models launched at that rate. Apple has steadily been moving toward seeing itself as a services provider, and it now markets apps, insurance, storage, paid services and music, as well as games, series, movies or television content. The company’s latest results show, once again, a small decline in revenue from its flagship iPhone product and a significant increase in the category of services.
We are clearly in the middle of a transition from owning stuff to renting it or paying a subscription to access transportation, music, movies, holiday homes, yachts, or whatever. Such a model is arguably more efficient and will hopefully clear our homes of all those old cellphones and computers that still work and never get put to good use or even recycled.
As long as the economics make sense, many people would probably welcome no longer having to buy a computer or a smartphone, only to consign it to a drawer within a year or two. At the same time, there a plenty of people out there who love buying and owning stuff, even if the pleasure is short-lived.
Will we soon no longer own smartphones, but instead lease them for a monthly fee until we exchange them for the next model? If so, and in an era of flat data rates, wouldn’t it make more sense if the company leasing us a device provided us with the data contract, thereby challenging the hegemony of the telephone companies, which used to offer subsidized devices with phone contracts. Nothing stays the same for long.