Apple has taken a game-changing step in technology sales. The Cupertino company has just launched Apple Upgrade in the United States, a device rental service that allows customers to use an iPhone, iPad, Mac, or Apple Watch by paying a monthly fee, without having to pay the full price upfront. The initiative, developed in collaboration with the Swedish fintech company Klarna, transforms the traditional purchase into a subscription model, a concept that has already proven effective in sectors such as music and film and is now arriving in the hardware market.
The news is no coincidence. It comes at a time when prices for high-end devices continue to rise, with rumors that the next foldable iPhone could exceed $2.000. Apple Upgrade lowers the psychological barrier to purchase by transforming a large one-time payment into a seemingly affordable monthly fee, even though the total long-term cost is similar or even higher. The company, which generated $78.800 billion in hardware revenue in its last quarter, now seeks to secure recurring income and build customer loyalty with a model that keeps them connected to the latest generation of products.
What is Apple Upgrade and how does Apple's new leasing program work?
Apple Upgrade is essentially a technology leasing or rental program. Customers choose a compatible device—always from the latest models—and sign a contract with a duration that varies depending on the product. For the iPhone and Apple Watch, the terms are 12 or 24 months , while the iPad and Mac offer contracts of 24 to 36 months. During this period, the user pays a monthly fee that entitles them to use the device, but not to own it. At the end of the contract, there are three options: return the device, exchange it for a newer model and continue making payments, or pay the residual value to keep it.
Financial management is handled by Klarna, which assumes credit risk and regulatory scrutiny, while Apple retains control over the user experience and customer relationship. Prices start at $11,99 per month for the Apple Watch and iPad , $17,99 for the iPhone, and $24,99 for the Mac, though the exact monthly fee depends on the model and contract length. Additionally, users can trade in their current device through the Trade In program to reduce their monthly payment.
This system isn't new for Apple. The company launched the iPhone Upgrade Program in 2015, but that initiative never really took off. An internal hardware subscription project slated for release in 2023 was canceled due to technical and regulatory issues. Now, with Klarna as its financial partner, Apple is reviving the idea with a more robust approach and a structure that avoids the obstacles that doomed Apple Pay Later. The alliance allows Apple to delegate the most sensitive aspects of the business —credit and banking regulations—to a specialist, while focusing on what it does best: designing products and keeping users within its ecosystem.
The psychology of subscriptions: why paying $35 a month is more appealing than $1.200 all at once.
Behind Apple Upgrade lies a very clear understanding of consumer behavior. Paying $1.199 for an iPhone 17 Pro Max outright is painful for most people. In contrast, paying $34,99 a month transforms that expense into a nearly imperceptible recurring cost , similar to a streaming subscription. Ownership ceases to be the goal, and continuous access to the latest technology becomes the product. It's the same logic that has led millions of people to replace buying CDs and DVDs with Spotify or Netflix subscriptions , but applied to physical objects.
Apple is well aware of this dynamic. Its digital services—iCloud, Apple Music, Apple TV+—already generate gross margins of 76%, compared to 40% for hardware. In the last quarter, services contributed $23.200 billion in gross profit with costs of only $7.500 billion, while hardware, despite generating significantly more revenue, brought in $31.500 billion with costs of $47.200 billion. Turning the purchase of a device into a recurring subscription is not a whim , but a business decision with all the figures laid out. A customer who pays $35 a month for life is worth much more to Apple than an occasional buyer who renews every four years.
The timing is also not accidental. The memory shortage and rising production costs have driven up technology prices. Apple's upcoming models, including the rumored foldable iPhone, are expected to exceed $2.000 in some cases. A monthly fee of $60 or $70 makes these ultra-high-end phones seem more accessible at first glance , even if the final price remains the same or is even higher. Furthermore, the program encourages upgrades: current devices are so good and receive updates for so many years that users are taking longer and longer to replace their models. With leasing, Apple ensures its customers always have a current device and continue paying for that privilege in convenient monthly installments.
Klarna, the partner that shields Apple from the regulator
Apple has been keen to avoid repeating the mistakes of its failed Apple Pay Later program, which ran into regulatory and technical hurdles that ultimately forced its cancellation. Choosing Klarna as its financial partner is a strategic move that allows Apple to avoid the credit risk and capital requirements associated with being a financial institution. The Swedish fintech company, specializing in installment payments, handles the financing and the scrutiny of banking regulators, while Apple retains control over the customer experience and device upgrades.
For Klarna, the agreement means access to a high-value customer base and a stronger presence in the US market, where it competes with giants like Affirm and Afterpay. It's a win-win for both companies , though undoubtedly more so for Apple, which retains the most profitable part of the business: the relationship with the user and the loyalty to its ecosystem. The Cupertino company doesn't assume the cost of credit or defaults, but it does benefit from recurring revenue that complements its existing digital services income.
Apple's strategy is clear: hardware is becoming a service, and the perpetual monthly subscription is the new norm . The company remains, in terms of revenue, a hardware company—of its $109.400 billion in quarterly revenue, $78.800 billion came from physical products—but the trend is undeniable. Services are growing at a much faster pace and offer double the profit margin. Apple Upgrade is the embodiment of this vision: transforming the customer's relationship with technology, replacing ownership with access and loyalty with contracts that are renewed almost seamlessly.
What would happen in Spain and Europe: the mirror of operators and technology leasing
Although Apple Upgrade is currently only available in the United States, its impact will soon reach Europe. In Spain, carriers like Movistar, Vodafone, and Orange already offer device financing linked to service contracts, but Apple's pure leasing model eliminates the carrier as an intermediary and puts the brand directly in front of the consumer. This move is reminiscent of what Apple achieved with the Apple Watch, selling cellular connectivity without relying on telecoms.
Spanish consumer credit legislation and data protection regulations present additional, but not insurmountable, barriers. Spanish consumers are familiar with pay-per-use models in sectors such as automotive and shared mobility , and technology leasing has gained traction in the business world. If Apple decides to bring its program to this market, it would encounter latent demand and competitors that have already established a foothold, such as mobile subscription services offered by the telecom companies themselves. This competitive pressure could accelerate the arrival of Apple Upgrade in Europe, where consumers are more price-sensitive and value flexibility.
The program also raises questions about ownership and the residual value of the devices. In strictly economic terms, renting may not be the best option , because Apple products hold their value quite well. Buying one, using it, and then selling it could end up being cheaper, but it requires careful calculations and accepting risks such as potential damage or fluctuations in the resale price. Apple is probably betting that not many users will choose that route and prefers to offer them a convenient solution that keeps them within its ecosystem.
Subscription fatigue is a real risk already affecting other sectors, but Apple has a head start thanks to its closed ecosystem and loyal user base. The real test will come when the program crosses the Atlantic and faces the specificities of the European consumer, more accustomed to comparing prices and with more generic alternatives. For now, Apple Upgrade is a firm commitment to pay-per-use, a model that promises to change how we understand technology purchases and, if successful, could shape the future of the industry.
