The news: Apple is working on offering a subscription service for its hardware, including its iPhone models, per Bloomberg.
Why this could work: By implementing a subscription model for its physical products, Apple can generate steady—and lucrative—revenues that could offset any losses should the company be required to open up its App Store to alternative payment methods, as some governments have begun requiring.
Subscriptions take hold: The subscription model has gained popularity lately, not least because it guarantees companies recurring revenues and access to a dedicated group of customers, many of whom might be persuaded to spend more on other products.
However: While subscriptions have worked well for digital services such as online gaming and video streaming, it’s been trickier for companies in other sectors to find steady success.
The big takeaway: Apple’s subscription model is likely to be successful because it allows consumers with varying budget constraints to get access to a product that is typically sold at a higher price point.
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