Apple + Klarna mean we can now get Apple-as-a-service

Apple’s plans for credit have become an alliance with Klarna, in the form of a new ‘Apple Upgrade’ scheme to launch in the US on July 28. The scheme will replace the existing iPhone Upgrade Program which is being phased out.

How this works

As Bloomberg explains it, the idea is that you will be able to finance most Mac, iPhone, iPad, and Apple Watch purchases over a fixed term subscription. That term extends to 36-month for Macs and iPads and 24-months for the wearables. 

What makes this Apple Upgrade scheme even more alluring is that you will be able to upgrade early to a newer device or keep/return existing devices, though it won’t include AppleCare+ coverage.

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You’ll be able to pay off the debt earlier if you like, but the arrangement will be subject to a soft credit check and additional fees may apply. Apple hopes to offer these products at payment plans which are more affordable than existing financing schemes. 

What this means

While some saw this coming, it represents a real shift in consumer purchasing habits to consider using products on this kind of subscription basis.

There is a value in this approach. Back in 2022, Counterpoint estimated that Apple might generated up to $5,000 per customer per year in annual revenue by offering its hardware on a subscription basis.

Five years earlier, Forrester analyst, Frank Gillet said, “someday Apple will likely offer bundles of services and products as a simple monthly fee, like the iPhone Upgrade Program but with everything included.”

With the addition of Apple One and Creator Studio, we’ve pretty much reached that point.

Small print

Not every Apple device will be offered under the scheme, so that means MacBook Neo, Apple Watch SE, the entry-level iPad, and iPhone 16 won’t be made available in this program.

The scheme will initially be made available in the US, though it is to be noted that Klarna also operates in other countries, so perhaps it will be extended eventually.

Perhaps inevitably, Klarna’s stock price briefly hit $20.63 on the news. It is now trading at $19.01 as investors calibrate the potential Apple impact on Klarna’s business.

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