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Apple hardware subscription as a service

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PlainName:

--- Quote ---The chances that Apple would stop selling hardware outright is somewhere between zero, nil, and zilch.
--- End quote ---

Why are you so sure? It would solve a lot of issues for them. The marketplace hasn't been ready for that kind of thing yet (not leasing or whatever you want to call it, but rent-only products) so history isn't a good indicator of future. Adobe shows that companies can and will do exactly that if they think they can get away with it, and maybe with users nowadays comfortable with the subscriptions of various kinds they are ready to go just that little bit further and accept an automatic new phone every 2 years for very little outlay. Rich gits will still be able to show they are by still getting the stupidly expensive ones.

Note: I am not suggesting that Apple will do this, I am asking why it's a dead certainty that they wouldn't.

tooki:
It’s because eliminating outright sales altogether would result in numerous negative consequences.

For starters, that rentals and leases are subject to various laws in jurisdictions around the world, so eliminating sales entirely would predicate an enormous legal effort.

Second, if the point of this is to ensure an ongoing revenue stream, then they’ll need to make sure that you are financially capable of paying the fee, before they hand you a $500-1300 piece of hardware. That means credit checks. And that means having some alternate mechanism for people who fail the credit check to obtain the device anyway. That’d have to be either a deposit or a sale, neither of which is an ongoing revenue stream.

Third, they rely heavily on third party resellers (especially mobile network operators) to sell a ton of devices. If they pulled out of that, depriving those network operators of their cut of the sale price, you bet those companies would start pushing competing products HARD. That’d mean lost sales. (Remember, the number of countries where Apple doesn’t do any direct hardware sales is larger than the number of countries where they do!)

Finally, they also know that there will be many customers, including some large companies, which do not want to lease. It’s be stupid to forfeit those sales entirely.


Comparisons with software are pointless and disingenuous: there’s nothing to recover if someone stops paying. They just disable the software and that’s that, but no capital is lost. Hardware is very different since there’s a significant capital investment in the asset. The fact that they could remote-disable it wouldn’t magically recover the actual cost of the device.

PlainName:

--- Quote ---It’s because eliminating outright sales altogether would result in numerous negative consequences.
--- End quote ---

There would certainly be consequences, but would they outweigh the benefits? In the short term Apple can motor on taking a hit if there will be a good return later on. Don't forget they have so much cash they have trouble bringing it home, so there's a lot of money abroad which could usefully be spent on abroad to achieve some end.


--- Quote ---they’ll need to make sure that you are financially capable of paying the fee, before they hand you a $500-1300 piece of hardware. That means credit checks. And that means having some alternate mechanism for people who fail the credit check to obtain the device anyway.
--- End quote ---

Maybe. Adobe isn't bothered by this, and perhaps Apple would go the same way: your phone phones home all the time (which they all do anyway) and won't work if it's not authorised. Sure, some toerag could decide he wants to nick it, but it will be worthless (apart from perhaps as parts) since it won't work. All phones already have that kind of capability built in but it's a drag to activate and it only deals with connections. Apple can easily extend that to just locking the entire thing.


--- Quote ---Third, they rely heavily on third party resellers (especially mobile network operators) to sell a ton of devices. If they pulled out of that, depriving those network operators of their cut of the sale price, you bet those companies would start pushing competing products HARD.
--- End quote ---

They'll still need distributors sell the contracts, distribute the phones, update the stuff, etc. But if, over time, the sellers were no longer necessary that wouldn't be a hard stop. It would be a temporary problem if it happened overnight, but it won't.


--- Quote ---Finally, they also know that there will be many customers, including some large companies, which do not want to lease.
--- End quote ---

Yes, but as I pointed out, things have changed a lot and now leasing software is now accepted as normal. And phones are not exactly irreplaceable as software is - if you lose the phone or switch brand you don't find you can no longer contact all your old friends! I don't think the leasing aspect will be much of a problem for an Apple product - you buy into the walled garden precisely because Apple basically oversee everything. Finally, you already cough a subscription on phones just to make calls. Extending that to the hardware won't be a big issue. The lack of old ewaste in the drawer you can't get rid of, and a new model every year or two, will be attractive.


--- Quote ---Comparisons with software are pointless and disingenuous: there’s nothing to recover if someone stops paying. They just disable the software and that’s that, but no capital is lost.
--- End quote ---

Maybe. The economics will change anyway since you don't want the old phones you've just upgraded polluting the market, so the hardware would have to be disposable (at least recyclable) and losing some will be priced in. Phones can also tell the bounty hunters where they are...

tooki:

--- Quote from: dunkemhigh on March 30, 2022, 11:44:37 am ---
--- Quote ---It’s because eliminating outright sales altogether would result in numerous negative consequences.
--- End quote ---

There would certainly be consequences, but would they outweigh the benefits? In the short term Apple can motor on taking a hit if there will be a good return later on. Don't forget they have so much cash they have trouble bringing it home, so there's a lot of money abroad which could usefully be spent on abroad to achieve some end.

--- End quote ---
Decimating their market share during that period would be something that would be very difficult to recover from.


--- Quote from: dunkemhigh on March 30, 2022, 11:44:37 am ---
--- Quote ---they’ll need to make sure that you are financially capable of paying the fee, before they hand you a $500-1300 piece of hardware. That means credit checks. And that means having some alternate mechanism for people who fail the credit check to obtain the device anyway.
--- End quote ---

Maybe. Adobe isn't bothered by this, and perhaps Apple would go the same way: your phone phones home all the time (which they all do anyway) and won't work if it's not authorised. Sure, some toerag could decide he wants to nick it, but it will be worthless (apart from perhaps as parts) since it won't work. All phones already have that kind of capability built in but it's a drag to activate and it only deals with connections. Apple can easily extend that to just locking the entire thing.

--- End quote ---
Again, comparisons with software are disingenuous. If an Adobe customer stops paying, Adobe doesn’t lose anything (other than a customer). If a hardware rental customer stops paying, they have lost the hardware, and recovering it would likely exceed its value. This is why leasing and renting at sensible rates requires a credit check, and why no-credit-check/low credit score rentals are obscenely expensive.

Apple already has activation locks, etc., which they already use to lock demo devices stolen from stores. (Which is why some devices aren’t even locked down.) But even such devices have some residual value on the used market.



--- Quote from: dunkemhigh on March 30, 2022, 11:44:37 am ---
--- Quote ---Third, they rely heavily on third party resellers (especially mobile network operators) to sell a ton of devices. If they pulled out of that, depriving those network operators of their cut of the sale price, you bet those companies would start pushing competing products HARD.
--- End quote ---

They'll still need distributors sell the contracts, distribute the phones, update the stuff, etc. But if, over time, the sellers were no longer necessary that wouldn't be a hard stop. It would be a temporary problem if it happened overnight, but it won't.

--- End quote ---
The whole point here, as I understood it, was that the “subscription” would be billed just like Apple’s online services. I cannot imagine any scenario where Apple would want to force resellers into being agents for a financial service. It just doesn’t make sense if the goal is to increase your own revenue.

What do you mean about resellers needing to “update” the phones? Arguably the most important change Apple caused in the mobile phone industry is breaking the carriers’ stronghold on phone software. To this day, Apple does not create carrier-specific software, nor give them veto power over software releases. (They only allow carriers to create config files for the OS.)


--- Quote from: dunkemhigh on March 30, 2022, 11:44:37 am ---
--- Quote ---Finally, they also know that there will be many customers, including some large companies, which do not want to lease.
--- End quote ---

Yes, but as I pointed out, things have changed a lot and now leasing software is now accepted as normal. And phones are not exactly irreplaceable as software is - if you lose the phone or switch brand you don't find you can no longer contact all your old friends! I don't think the leasing aspect will be much of a problem for an Apple product - you buy into the walled garden precisely because Apple basically oversee everything. Finally, you already cough a subscription on phones just to make calls. Extending that to the hardware won't be a big issue. The lack of old ewaste in the drawer you can't get rid of, and a new model every year or two, will be attractive.

--- End quote ---
Repeat after me until you actually understand this: Hardware 👏 is 👏 not 👏 software. 👏

The fact that software companies have been able to force consumers and small businesses into subscriptions (a change that didn’t affect large customers anyway, since they have used subscription-style site licenses since forever) doesn’t mean it translates into hardware.

People but Apple because they want stuff that works. The fact that the walled garden is how Apple provides this doesn’t mean the walled garden is the thing people are after.


--- Quote from: dunkemhigh on March 30, 2022, 11:44:37 am ---
--- Quote ---Comparisons with software are pointless and disingenuous: there’s nothing to recover if someone stops paying. They just disable the software and that’s that, but no capital is lost.
--- End quote ---

Maybe. The economics will change anyway since you don't want the old phones you've just upgraded polluting the market, so the hardware would have to be disposable (at least recyclable) and losing some will be priced in. Phones can also tell the bounty hunters where they are...

--- End quote ---
If Apple didn’t want “old” phones “polluting” the market, they wouldn’t sell refurb units, nor sell on pre-owned units onto the secondary market, which they do.

And if Apple wanted to artificially limit the useful life of “old” phones, they wouldn’t offer the hands-down, by a wide margin, longest software support for their phones.

Just… sorry, none of your argument makes sense.

Cerebus:

--- Quote from: dunkemhigh on March 30, 2022, 11:44:37 am ---Yes, but as I pointed out, things have changed a lot and now leasing software is now accepted as normal.

--- End quote ---

That's an unwarranted assertion. There are a lot of people who point blank refuse to use subscription based software, myself included. You only have to note the number of comments along the lines of "No. Hell, no! Never!" that come up on here whenever the subject is raised. So "now accepted as normal" - not proven in my opinion.

Anyone who has ever experienced a few months of "no money", or has the imagination and is realistic enough to know that it could happen to them, ought to think twice before putting themselves into the situation where things they expect to have the use of for everyday living could go away if they temporarily can't afford the subscription/rental/leasing payments on something. You'd be well stuffed if you lost your job and didn't have the use of your phone while arranging interviews etc.

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