People are accustomed to subscribing to software services for their desktops, laptops, or tablets rather than purchasing them. However, if Apple Inc. has its way, it may be possible to subscribe to the newest iPhone or Mac.  Is subscribing to hardware, or Hardware-as-a-Service (HaaS), the next evolution in the shift from ownership to usership?  Why might one want to consider subscribing to hardware?

Rent Your Next iPhone?

Apple Inc. is working on a subscription service for the iPhone and other hardware products, according to Bloomberg.[1]  This could make device usership similar to paying a monthly fee, much as the way that some people pay for software.  Bloomberg went on to note that the subscription model may help Apple generate more revenue by making it easier for consumers to spend on new devices. Instead of a large upfront payment, monthly fees may be more financially palatable.  Pricing would differ from a monthly installment fee in that the monthly charge would not reflect the price of the device split over a specific number of months.  Rather, it would be determined by which device and services the consumer chooses.

Start of a Trend

If successful, other companies could adopt a similar plan.  HaaS could become the standard for device usership.  And the concept could easily move beyond technology.  Imagine subscribing to, instead of owning, household appliances like a refrigerator or washing machine. 

Potential Benefits

The benefits of HaaS are similar to those offered by other subscription services such as software services.[2] For the consumer, the potential benefits may include lower up-front costs and the ability to try and upgrade to new devices.

For companies offering the service, potential benefits include a more predictable and recurring revenue stream, increased engagement with customers, increased return on the cost of acquiring new customers as subscriptions often mean repeat business, and lower retention spending.

HaaS Models

Subscription consultant company Zuora notes three potential hardware subscription models:[3]

• Hardware-as-a-Service – moves the cost of hardware to a recurring monthly fee
• Hardware enabled services – hardware is priced upfront, but associated software is offered on a subscription basis, e.g., Peloton, which sells the bike but offers subscription-based fitness services
• Hardware related consumables-as-a-service – hardware is offered at a low price to drive long-term revenue from the commodities needed to use the hardware, e.g., HP using low-priced printers to sell ink refills

[1] Gurman, Mark, Apple Is Working on a Hardware Subscription Service for iPhones, Bloomberg, 3/24/22

[2]  See our blogpost How Businesses Might Benefit from a Subscription Model

[3] The Hardware-as-a-Service Playbook for Business Model Change, Zuora, Retrieved 4/2022