Tech giant Apple is gearing up to introduce a significant new device leasing initiative named Apple Upgrade, marking one of the most substantial adjustments to its sales model in the company's history.
According to a report citing sources familiar with the matter, this new service is slated to launch on July 28th and will support a wide range of iPhone, Mac, iPad, and Apple Watch models. Apple will collaborate with Swedish fintech firm Klarna Group, which will provide the necessary financial backing for the program.
The plan is initially set to roll out in the United States, covering both physical Apple retail stores and the online store. Following the announcement, shares in Klarna saw an initial surge of up to 11%, though these gains were not sustained, with the stock closing up only 1.44%. Apple shares remained largely flat, closing up 0.35% on Tuesday.
How the Program Operates and Key Details
The Apple Upgrade program will function similarly to a subscription service.
Users will have the flexibility to pay off the device early, upgrade to a newer model ahead of schedule, or keep the device at the end of the lease term; some of these actions may incur additional fees. Similar to car leasing, customers also have the option to return the device when the lease period concludes.
The lease term for iPhones and Apple Watches will be 24 months, while for Macs and iPads it will be 36 months. Customers will need to pass a soft credit check, which does not impact their credit score, to qualify.
Context and Strategic Shift
This new initiative comes at a time when Apple has recently raised prices on several products, including Macs and iPads, by hundreds of dollars due to industry-wide memory chip shortages. The market also widely anticipates that Apple will further increase prices with the launch of the next-generation iPhone in September.
Apple plans to market Apple Upgrade as a way to acquire devices with lower monthly payments. Concurrently, the company intends to stop accepting new enrollments for two existing iPhone purchase programs—the iPhone Upgrade Program and the standard installment financing service—to make way for the new Apple Upgrade offering.
Unlike the current iPhone Upgrade Program, Apple Upgrade will not include AppleCare+ coverage. Additionally, certain products will be excluded from the plan, including the Apple Watch SE, the entry-level iPad, the iPhone 16, and the MacBook Neo. Corporate procurement and education discount orders are also ineligible.
Apple had previously considered launching its own internally financed hardware subscription plan for iPhones and other devices but shelved that idea in 2024. The decision to partner with Klarna now allows Apple to offer consumers a new way to purchase devices without having to assume the associated financial risks itself.
Comments