Apple to launch Klarna-backed device subscription service amid price hikes
The tech giant partners with fintech firm Klarna to offer 24 to 36-month leases on iPhones, Macs, iPads, and Apple Watches, following significant price increases across its product range.
Apple is preparing to launch the Apple Upgrade subscription service, a new lease-to-own programme developed in partnership with financial technology firm Klarna. According to reports from Bloomberg, the initiative is set to go live as early as 28 July, marking a significant expansion of the company’s consumer financing infrastructure. The service will allow customers to lease iPhones, Macs, iPads, and Apple Watches for periods of 24 to 36 months, with options to upgrade to newer models, purchase the device outright, or return it at the end of the term.
The partnership with Klarna is designed to allow Apple to offer hardware subscriptions without assuming the associated financial responsibility. This arrangement leverages Klarna’s existing buy-now-pay-later infrastructure, which has been integrated into Apple Pay since 2024. The move follows Apple’s decision to shelve earlier plans for a hardware subscription service in 2024, a strategy that was abandoned due to concerns regarding financial oversight. By utilising Klarna’s platform, Apple aims to streamline its payment plans while mitigating risk.
Eligibility for the Apple Upgrade programme will exclude certain entry-level devices, specifically the iPhone 16, MacBook Neo, Apple Watch SE, and the base iPad model. Additionally, the service will not include AppleCare coverage. To participate, customers will undergo a soft credit check. The lease terms are reported to be 24 months for iPhones and Apple Watches, and 36 months for iPads and Macs. Apple may cease new sign-ups for the existing iPhone Upgrade Program and standard financing options to facilitate the transition to this new subscription model.
The launch comes in the wake of significant price increases across Apple’s product lineup. Recent months have seen hikes of up to $1,300 on certain devices, including the M3 Ultra Mac Studio, with further increases expected for the upcoming iPhone lineup. The subscription service is intended to mitigate the upfront costs for consumers, potentially boosting sales by allowing customers to acquire new devices without a single large payment. This strategy aligns with Apple’s broader objective to increase recurring revenue, mirroring the success of its services business.
Initial availability for the Apple Upgrade programme is believed to be restricted to the United States, with other markets remaining uncertain. While the service offers flexibility, including the ability to pay off devices early, it operates within the buy-now-pay-later sector, which carries inherent risks for consumers, such as higher fees for missed payments. As Apple prepares to unveil the service, investors will be watching to see how this shift in financing strategy impacts consumer adoption and the company’s bottom line.
