Apple Introduces Lease Program for iPhones at $17.99/Month
Apple has announced a new leasing program called Apple Upgrade, allowing US customers to lease an iPhone starting from $17.99 per month, facilitated by the buy-now-pay-later service Klarna. This program effectively replaces Apple's 11-year-old iPhone Upgrade Program.
A New Approach to Pricing
In response to criticism about high product prices, Apple has not reduced the cost of its devices but rather changed how consumers perceive them. Forrester analyst Dipanjan Chatterjee notes that while the price remains the same, leasing makes it feel more manageable by replacing a large upfront payment with monthly installments.
How It Works: Lease and Return
Under this lease arrangement, Klarna owns the device during the lease period. At its end, you have several options: upgrade to a new iPhone, purchase the leased device with a one-time fee, or return it. If you do nothing, your payments will continue on a month-to-month basis, which Apple warns may increase.
Fine Print and Fees
The lease agreement includes fees for early termination or upgrade, described as "substantial" by Apple. Additionally, if the device is not returned in good condition, a damage fee may apply, and AppleCare support will no longer be bundled as it was with the previous program.
Addressing Concerns: No "Bricking" Scare
Initially, there were concerns about code found in iOS 27 beta suggesting a system to restrict access to apps if payments were missed. However, Apple has addressed this issue, assuring that there will be no such limitations on device functionality due to missed payments.
The Business Strategy
The leasing program addresses a challenge for Apple: consumers are keeping their iPhones for longer periods, which disrupts the company's upgrade cycle and investor expectations. Leasing encourages regular visits to the store every one or two years, providing Apple with a more consistent revenue stream.