An Apple Prime Subscription for Hardware & Services Bundle is in Demand and the Company Knows

Oct 31, 2019
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An Apple Prime subscription might be on the cards in the future for the company to sell hardware and services bundles to customers. Ideally, if ever implemented, it will allow users to pay a monthly price for an iPhone and Apple's services like Music, iCloud, News+ and TV+, while getting the latest hardware upgrade each year.

Apple CEO Tim Cook was asked a question on services and hardware bundles by analyst Toni Sacconaghi during 2019 Q4 earnings call.

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And then if I could follow-up, just on the bundling of Apple TV+, I guess for you, Tim, this is really the first time we've seen a significant bundling of services offering and hardware offering. And I'm wondering if you view this as kind of a strategic advantage of Apple and whether we might see more hardware plus services offerings -- bundled offerings, and ultimately do you -- do you ever believe that your hardware itself might be offered as a bundled service.

Tim Cook did not flat out confirm or deny the possibility of such an offering in the future:

On the bundle question, Toni, we look at each service, and decide what's best to do for it and with TV+, we concluded that a great way to get more people to see the content would be to do this, and it would be a good gift for our users. And so that's what we're doing. You can also see that on the other services we're not doing that. And so it's not part of a broader pattern, or although I wouldn't want to rule out for the future that we might not see another opportunity at some point in time.

Cook also brought up the 24-month Apple Card financing feature in response to the bundle question. This program means that users can buy an iPhone using an Apple Card, and pay it off over a 24-month installment plan, with zero percent interest. It will be rolled out by the end of this year to Apple Card customers. Apple also has trade-in programs as well as monthly financing programs via cellular companies, that provide hardware and service subscriptions, which are not specific to Apple's service offerings only. For example, some cellular companies might offer a cellular package, with a free subscription for Spotify for some time, when you buy an iPhone from them.

This is what Time Cook said, to complete his answer:

In terms of hardware as a service or as a bundle, if you will, there are customers today that essentially view the hardware like that because they are on upgrade plans and so forth. And so to some degree that exists today, my perspective is that we will grow in the future to larger numbers that will grow disproportionately. And one of the things we are doing is trying to make it simpler and simpler for people to get on these sort of monthly financing kind of things. That's a part of what we announced with the Apple Card earlier in the call and so we are cognizant that there are lots of users out there that want sort of a recurring payment like that and the receipt of new products on some sort of standard kind of basis and we are committed to make that easier to do than perhaps it is today.

While it is not a formal announcement, it is good to see that Apple is aware of the demand for an Apple Prime subscription. The company is rapidly growing their services business and portfolio, and they can piggyback on the growth to keep users locked into hardware. It will also make it easy, and possibly cheaper, for customers to keep track of the various services that they pay for, if they are bundled with their hardware purchase.

Microsoft also offers a hardware and service bundle in the form of Xbox All Access, which lets users  pay $20/month to get Xbox Live Gold, Xbox Game Pass, and an Xbox One console, over a two-year period. Microsoft even promises to upgrade the console to Xbox Scarlett, after 12-monthly payments are complete.

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Would you jump in and sign up for an Apple Prime subscription?

via CNBC, transcript via The Motley Fool

Relevant news from Apple's 2019 Q4 quarterly earnings:

Products mentioned in this post

AirPods
AirPods
USD 144
iPad Pro
iPad Pro
USD 779
iPhone 11
iPhone 11
USD 0

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