Apple’s Income Problem and How iPhone Users Might Pay to Fix It

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Apple’s Income Problem and How iPhone Users Might Pay to Fix It

Cody Busch-Weiss, Writer

Apple is one of the largest tech companies in the world, selling billions of dollars worth of products every year. Apple’s products are high quality and applicable for a wide variety of uses, from gaming to video editing to accounting. So why is Apple struggling with their income?

For the most part, Apple sells hardware products instead of software plans, with relatively few products compared to other companies, which produce everything from phones to refrigerators to TVs. When Apple makes a product such as a new iPhone, its revenue spikes for the first month or so of the device being released and then levels out. Their average income for an entire year is usually quite high, but it’s concentrated around the release of major new products. Investors like consistent income and Apple’s is anything but consistent. Consumers are now holding on to their old phones instead of buying the newest phone every time one comes out. This may be partially due to the high prices of the recent iPhone X and iPhone 11, and that some consumers with the iPhones 7 and 8 see no clear-cut reason to upgrade to the X or 11.

To fix this problem, Apple wants to make consumers who have bought devices pay consistently to own the iPhone. It is not quite clear how Apple would implement this, or if it would apply to current phones or only future devices, but Apple is certainly considering it, as Apple CEO Tim Cook confirmed in a recent interview with NBC. This change would not only give Apple a more steady income, but it would likely give them more income overall, as people may be more inclined to make many small payments over time instead of one big payment, allowing Apple to charge more in the long run. Apple already has some subscription programs, where they will upgrade your phone every couple of years, and these do disincentivize switches to another company’s phones, but not enough consumers take part in these plans to have a meaningful impact on Apple’s revenue.

There seems to be a high likelihood that Apple will make its products available in the future using recurring payments, where consumers pay a monthly fee to use the phones, along with iCloud and other Apple software products. This would mean that each Apple customer would have to pay more just to keep using Apple’s products, and consumers still using old phones might have to start paying as well. Investors have been concerned for years over Apple’s spikey income, and Apple may finally be taking action.

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