Apple has officially announced the launch of Apple Upgrade, a new device subscription service in partnership with Klarna. The program, starting July 28 in the United States, allows customers to obtain iPhone, iPad, Mac, and Apple Watch through a flexible lease agreement, with terms ranging from 24 to 36 months. This initiative marks a return to Apple's hardware subscription ambitions, after the company shelved a similar project in 2024 due to financial oversight concerns.
Klarna partnership removes financial risk for Apple
According to Bloomberg, Apple chose Klarna as a partner to handle the credit aspects of the program. This way, Cupertino avoids taking direct financial responsibility for the leases, delegating credit assessment and payment management to Klarna. The two companies have collaborated since 2024, when Apple integrated Klarna as a "buy now, pay later" option in Apple Pay. This synergy has enabled a model that combines user flexibility with financial stability for Apple.
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Terms and flexibility of the new service
With Apple Upgrade, customers can choose among several options at the end of the lease: return the device, purchase it outright, or upgrade to a newer model. Early payoff is also allowed. Leases for iPhone and Apple Watch will last 24 months, while iPad and Mac leases will extend to 36 months. A soft credit check is required. However, some limitations apply: the program will not support AppleCare and will not be available for devices like iPhone 16, MacBook Neo, Apple Watch SE, and base iPad.
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Price hikes and Apple's strategic moves
The arrival of Apple Upgrade follows a period of price increases for many Apple products, with hikes ranging from $100 up to $1,300 for the M3 Ultra Mac Studio. Additionally, Apple is expected to reveal its new iPhone lineup in the coming weeks, with further price bumps. The subscription service could soften the impact of these increases, offering consumers a way to access expensive devices without a single upfront payment. As we reported in a previous article, Apple blocked new sign-ups to the old iPhone Upgrade Program to focus on Apple Upgrade. This move is part of a broader strategy to boost recurring revenue, similar to its successful services business.
Amid legal pressures
The decision to launch a hardware subscription comes at a time when Apple faces significant financial pressures, such as the recent $634 million patent verdict in the Masimo case. Offering a payment plan could help maintain high sales volumes despite rising prices. Moreover, future products like the iPhone Air 2 with A20 Pro chip may benefit from this new purchase flexibility.
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Despite consumer benefits, "buy now, pay later" programs carry risks, such as late payment fees. Apple Upgrade will initially be available only in the US, with no confirmed date for expansion to other markets. For more details, refer to the original article on Engadget.
