Combined Hardware-Software Subscription Bundles a Logical Step for Apple, Analysts Argue

[MacRumors]

Apple is positioning itself to launch a combined hardware and software subscription, according to Loup Ventures analysts.

The report makes a compelling argument, based on a range of industry trends, aggregated data, and existing infrastructure, that Apple is in a prime position to launch an all-in-one hardware and software subscription.

Similar to the iPhone upgrade program, we believe, over time, Apple's delightful hardware trade-in experience for Mac, iPad, and Watch will evolve into hardware subscription offerings for these devices. Eventually, we envision the company merging its services offerings, alongside hardware subscriptions, to create a 360° bundle. Think of this as paying a monthly fee to Apple for most of your tech needs.

The conclusion is partly based upon industry macro trends, including "an ongoing digital transformation" and "changing consumer buying preferences." This is supported by the fact that Apple is said to be the only company that could create such a subscription, given its service and maintenance logistics, as well as its unique hardware and software integration.

Offering a combined hardware and software subscription would allow Apple to markedly increase revenue and earnings visibility, and in turn, expand its earnings multiple. Loup Ventures also demonstrates the likelihood of significant consumer demand for such a subscription, as well as corporate viability.

The iPhone trade-in program, AppleCare, Apple One, and the iPhone Upgrade Program are said to be key building blocks in the journey toward launching a combined hardware and software subscription. The entire internal infrastructure for such a scheme appears to already be in place through these services.

For hardware subscriptions and ultimately a 360° bundle to gain wide adoption, the product family must work seamlessly together, the infrastructure to service and maintain those products must exist, and the products must hold their value over time. Apple is the only company that can bring all three of those together.

The report also notes that rivals such as Google and Samsung will struggle to compete with a potential all-in-one Apple subscription. Google, for example, suffers from fast declines in device value, making the trade-in market much less commercially feasible. Samsung, on the other hand, has poor hardware and software integration, so while it could offer hardware subscriptions, it would be unable to create an attractive package including integrated software services.

See the full report by Loup Ventures for more information.

Article Link: Combined Hardware-Software Subscription Bundles a Logical Step for Apple, Analysts Argue

 

[Mansu944]

Welcome to the world where you own nothing....merely rent it.

 

[Baymowe335]

“Analysts” have gotten Apple wrong for years.

They always know what’s best until they are wrong and Apple shows them.

 

[mozumder]

Waiting on Apple to also serve as an ISP and offer Internet access... they will probably end up building their own consumer network.

 

[-BigMac-]

Keen!
When i buy upgrades, I sell my old stuff anyway.
Removing that re-sale hastle means removing the most annoying part of the whole cycle.

Where do i sign up?!

 

[ProfessionalFan]

I would like a program like this for Macs and iPads. I know some people get hung up on not "owning" a product with these programs, but you would in all likelihood have the option of buying it outright like you can currently do with the phone.

 

[iMe]

great out of ecological viewpoints. things apple rents out will be good to them only if they last a long time... and are upgradable once they are too old. (cradle to cradle concept)

 

[davidjschloss]

Welcome to the world where you own nothing....merely rent it.

The annual apple iPhone upgrade program is fully bought out in 24 months. You're essentially getting a 0% APR loan for 24 months (albeit with the cost of that 0% baked in). I'm not sure how this is only renting?

This is financially the same as a mortgage or a car loan. You're paying the bank to spread out the payments, but at the end the product is yours.

 

[adamjackson]

Welcome to the world where you own nothing....merely rent it.

I'm a crumudgeon through and through but that's been life for a few hundred years. try not paying your property tax and see how long you "own" your land.

 

[davidjschloss]

Waiting on Apple to also serve as an ISP and offer Internet access... they will probably end up building their own consumer network.

They did that. It's a horrible market for them. As an ISP they'd have to build massive amounts of infrastructure, manage that infrastructure, deal with all the customer service issues of that infrastructure. Why would Apple want to compete with Verizon or Comcast, when they can simply sell a set top device where they make a portion of revenue for every subscription sold on it, and make themselves an indispensable part of that ISP?

Right now if you want Disney+ and you're on FIOS you need a TV or box like AppleTV that can run the app. (AppleTV, Fire, smart TVs that run Android, AmazonTVs, etc.)

In many parts of the country you can't even pick who your ISP is, it's a monopoly set at the local government level. Where I am, I can get Comcast or Fios. That's it. Can't get Google Fiber.

Better to rent people the cows than to own the farm the cows are on.

 

[adamjackson]

Back 5 years ago and as far as I can remember (My first Mac was an LC III), Apple's resale value on eBay was always pretty good. I upgraded every 12 months whether I needed to or not. I'd usually get 70-85% of the value of the computer at the 12 month mark. Id' sell the machine in the box, cleaned and with apple's warranty still in effect so a $1999 MacBook Pro (Powerbook back in the day) I'd get $1670-$1700 for it and I'd go buy a new one for $1999 and start the process over again.

yet about 5 years ago, things shifted a lot. iMac was $3000 new and worth $1800 after 12 months. the $2499 MacBook Pro was worth $1500. I'd basically lose more than I was comfortable with so I started keeping my machines longer (now average is 3 years between upgrades).

If Apple can charge me monthly and I lease them, that's always been something I'd prefer. Businesses do it, individuals should be able to as well. I leased back in the day when I was in the business Microsoft VAR world. I'd love to give Apple $100 a month and just get a new machine every 12 months

 

[tymeframe]

You're always better off financially owning your devices, but if you have the cash to burn, why not.

 

[B.A.T]

This will work great for some but probably not for me. I think it would be great if something like this did exist, more options are always better.

 

[McKodiak]

Tech is changing so often. This is probably a logical step. It doesn't feel great shoveling out dollars for premium equipment that is obsolete between 6 and 18 months later. People use the tech to push boundaries in their own industries. They need the current tech to compete and innovate.

You can own your own device and sell it and flip those dollars and then some for new equipment, but I doubt anybody enjoys those logistics in achieving that. If Apple provides the process to trade in at a decent price and provide newest tech, that could be appealing for many. iPhone upgrade program was a big success and measuring stick for this proposed larger scale.

 

[neuropsychguy]

You're always better off financially owning your devices, but if you have the cash to burn, why not.

Not always but usually. It depends in part on what the terms of renting/leasing are. It also depends on what you're doing with the device. But those can be nuanced situations that require financial skills to project real or potential future costs.

This is similar to the old criticism of Mac costs: "But they are so much more expensive than an equivalent Windows-based PC!" Even ignoring fallacies of equivalence, with resale values, the cost of Mac ownership for general consumers was less expensive or similarly-priced over time to many Windows-based PCs, even ones that were less expensive up front (I used to run these numbers regularly to see if it made sense to not buy a Mac; sometimes it did but most of the time it didn't). My point is that owning is not always the better fiscal decision, even for Apple devices.

 

[Cosmosent]

Munster, Ives, Huberty, & yes even Cramer, are ALL "AAPL Cheerleaders" masquerading as so-called Pro Stock Analysts !

These three are the Best that I know of:

● Toni Sacconaghi
● Jeffrey Kavaal
● Dan Niles

 

[4487549]

Waiting on Apple to also serve as an ISP and offer Internet access... they will probably end up building their own consumer network.

And then they’ll start making wireless routers—wait…

 

[neuropsychguy]

Tech is changing so often. This is probably a logical step. It doesn't feel great shoveling out dollars for premium equipment that is obsolete between 6 and 18 months later. People use the tech to push boundaries in their own industries. They need the current tech to compete and innovate.

You can own your own device and sell it and flip those dollars and then some for new equipment, but I doubt anybody enjoys those logistics in achieving that. If Apple provides the process to trade in at a decent price and provide newest tech, that could be appealing for many. iPhone upgrade program was a big success and measuring stick for this proposed larger scale.

That's one reason I'm getting rid of a 2017 iMac and getting a new MacBook Air or Mac Mini (haven't decided yet). The reasons for owning the iMac changed with technologies over the past couple years (more "cloud" computing and less local) so there isn't much need for a high-end local machine.

As for selling vs. trade-in. I probably could have sold the computer for more than Apple will give for a trade-in but at most the difference was only a few hundred dollars (maybe higher but also possibly about the same as trade-in values). To many people that's worth it but it wasn't worth my time at this point. That trade-in will cover (or more than cover) a new computer (even counting the cost of purchasing a monitor). Granted, an iMac vs the intro-level M1 Macs are different machines but I also go from a 3 year old computer to a new one (with a warranty and forward-facing processors).

So yes, there are possible perks of a "rental" program.

 

[ksec]

For consumer this might not be interesting, Although I dont doubt there will be 5% usage base who are willing to pay a fee and just have the latest and greatest iPhone every year. ( Which really is just the iPhone Upgrade Programme )

For Business that is different. iPhone, or even Mac Subscription with AppleCare completely change the game because Business doesn't like to own anything. They also dont like one-off expenses every now and then. Having a monthly fees that fix it for them is much better especially for those Fortune 500 customers. Apple already have more cash than they know what to do with it, changing it to a steady stream of revenue is much better.

Edit: It is also worth mentioning the Monthly fees for AppleCare is already at a higher premium than yearly AppleCare. And AppleCare as an insurance is already at a higher premium compare to other similar insurance offering on the street. ( i.e Lots of Margin ). A monthly AppleCare subscription from business is going to be immensely profitable. Apple will likely offer some discount, but even after a discount it is still at a higher premium rate.

 

[TheSuperE]

Apple is positioning itself to launch a combined hardware and software subcription, according to Loup Ventures analysts.

The report makes a compelling argument, based on a range of industry trends, aggregated data, and existing infrastructure, that Apple is in a prime position to launch an all-in-one hardware and software subscription.



The conclusion is partly based upon industry macro trends, including "an ongoing digital transformation" and "changing consumer buying preferences." This is supported by the fact that Apple is said to be the only company that could create such a subscription, given its service and maintenance logistics, as well as its unique hardware and software integration.

Offering a combined hardware and software subscription would allow Apple to markedly increase revenue and earnings visibility, and in turn, expand its earnings multiple. Loup Ventures also demonstrates the likelihood of significant consumer demand for such a subscription, as well as corporate viability.

The iPhone trade-in program, AppleCare, Apple One, and the iPhone Upgrade Program are said to be key building blocks in the journey toward launching a combined hardware and software subscription. The entire internal infrastructure for such a scheme appears to already be in place through these services.



The report also notes that rivals such as Google and Samsung will struggle to compete with a potential all-in-one Apple subscription. Google, for example, suffers from fast declines in device value, making the trade-in market much less commercially feasible. Samsung, on the other hand, has poor hardware and software integration, so while it could offer hardware subscriptions, it would be unable to create an attractive package including integrated software services.

See the full report by Loup Ventures for more information.

Article Link: Combined Hardware-Software Subscription Bundles a Logical Step for Apple, Analysts Argue

We’re all just renting everything we own for a short while anyway. I’d prefer to have the newest stuff everytime it hits. Life’s too short.

 

[Rogifan]

Did this research note really use the word ‘delightful’? Are they being paid by Apple? 😂

 

[mw360]

Smart devices, IoT, glued-in 'consumable' batteries. There's little point owning this stuff anyway, it all stops working on the manufacturers schedule, not ours.

 

[jlc1978]

Keen!
When i buy upgrades, I sell my old stuff anyway.
Removing that re-sale hastle means removing the most annoying part of the whole cycle.

Where do i sign up?!

From a business perspective this woul make sense. Ideally it wouyld allow for upgrade to the latest device s o i would always have the latest MBP, iPad Pro, etc. as well as access to software and cloud services. Idelally AppleCare would be part of the deal as well. If the price is right I would jump on the deal. It would just speed up my turnover time., as I currently repalce my MBP when AppleCare runs out.

For personal use I'd be less inclined as those devices typically stay in service for an extended period.

 

[vipergts2207]

I will never subscribe to hardware, just like I’ll never lease a car.

 

[Zwhaler]

Tech is changing so often. This is probably a logical step. It doesn't feel great shoveling out dollars for premium equipment that is obsolete between 6 and 18 months later. People use the tech to push boundaries in their own industries. They need the current tech to compete and innovate.

You can own your own device and sell it and flip those dollars and then some for new equipment, but I doubt anybody enjoys those logistics in achieving that. If Apple provides the process to trade in at a decent price and provide newest tech, that could be appealing for many. iPhone upgrade program was a big success and measuring stick for this proposed larger scale.

You make a good point, but Macs aren't obsolete 6-18 months after release. I think a hardware subscription would be cool for people who want the latest all the time, so I'm not against it.