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.
