14 DAY TRIAL // There's a short, but complicated answer to this question and it all depends on how some markets will play in the next year. Apple is certainly going through the era of the Subscription Model and users are slowly getting convinced that this may be the future when it comes to both hardware and software.
It's been 9 years since the iPhone was announced and having a carrier subscription was the best way to get the then-most-wanted smartphone. Judging by the way Apple presents every new iPhone in September, they still like the idea of offering a subsidized phone that keeps the same low price year after year.
Too good to be true?
"The iPhone Upgrade Program," also known as the annual upgrade offer, changed everything in 2015. It sounds like the best offer out there. You pay upwards of $32 per month and get a new iPhone every year, complete with AppleCare+.
Apple calls that "The best way to own iPhone" and the users have some advantages: the iPhone is always unlocked and there are no limits on the carrier and mobile plan you get. One of the best things is that you get the new iPhone when it launches. There's no waiting for a 24-month plan to end.
Who wouldn't pay $390 (€357.21) every year to get a brand-new iPhone? Well, there's a catch! At the end of those 12 months, you need to give the phone back, so you can't just sell it to someone else and get some cash. Also, this is only available in United States.
It doesn't really matter if you drop it or bring it back with its screen cracked. The AppleCare+ covers accidental damage (including liquid damage) and hardware issues for the iPhone, battery, EarPods and other accessories. What if you got a new iPhone 6s in July and you want the brand-new iPhone 7 in September? Well, all you have to do is pay those $390 and upgrade.
Is that too good to be true? Apparently, not enough. Studies have suggested that Apple only sold below 300,000 units via the iPhone Upgrade Program. To put that in perspective, the company sold over 74,8 million units worldwide and one third of that was in the US alone.
Tim Cook's dilemma
Tim Cook did not seem too optimistic about the subscription model for iPhone. In an answer to a question during the "Q1 2016 Apple Financial Results Conference Call," Tim Cook said he could not predict the way that was going to work in an year from the launch of the program. A reserved answer to such a question would be just fine. But Apple only offers a subscription model for iPhone in US. Extending that to International markets and still keeping a reserved prognosis would not be a good sign.
However, this is just one man's opinion based on 3 months of a revenue model in US. The opening of this way of selling the iPhone in emerging markets could result in a change of heart even for Tim Cook.
Think about having the latest and greatest iPhone for less than half the price (even if you have to give it away at the end of the year). Western Europe, North and South America will happily embrace that right away. Countries like China and India may also get the same deal for the upcoming iPhone 6se or whatever Apple is going to call it.
It's time to test this on the Apple Watch
Remember when the Watch was out and everyone was speculating on the pricing model of the new device. One of the ideas that were gaining traction was about an Apple Watch that could be given back to Apple at the end of the year just to be upgraded to a new, more powerful hardware.
And when you pay $17,000 (€15570) for an 18-Karat Yellow Gold Apple Watch, you may want to have that up-to-date for a few good years and maybe even pass-it on to your kids.
A subscription model for the Apple Watch is something that may work in Apple's advantage. The guys from Cupertino only sold 12.4 million units until now. Which is A LOT, by smart watch standards, but it can be much better if users are happy with the low yearly price of an Apple Watch Upgrade Program.
The software side shines
Apple Music, iCloud - these are just the examples of working subscription models that truly work. With all the hiccups of iCloud, back when two-factor authentication was not around, the guys from Cupertino managed to build a successful business and the end user is pretty happy.
Sure enough, Apple Music is not a world-wide phenomenon, but the TV subscription may very well be. We all know Eddy Cue and his team are working to get TV station as an ally to sell their content just as iTunes did with songs.
In conclusion, Apple is ready for the Subscription Model and 2016 will show us if the market is ready for it.