Apple's Sales Model Undergoes Major Change: Partners with Klarna to Launch Device Leasing Program, Lowering Barriers to Purchase and Stimulating Sales

Apple is preparing to launch a device leasing program called Apple Upgrade, which will become one of the company's biggest adjustments ever to its device sales model.

According to Bloomberg, citing sources familiar with the matter, the new service is scheduled to go live on July 28, supporting most iPhone, Mac, iPad, and Apple Watch models. Apple will partner with the Swedish fintech company Klarna Group, which will provide financial support.

The program will initially launch in the US market and will cover both Apple retail stores and the online store. After the announcement, Klarna's stock price rose as much as 11%, although the gain was not maintained and the stock ended up closing up only 1.44%; Apple's stock price remained largely flat, closing up 0.35% on Tuesday.

Operational Mechanism and Leasing Details

Apple Upgrade will follow a subscription-like model.

During the leasing period, users can choose to pay off their devices early, upgrade to a new model in advance, or keep the device at the end of the lease; some actions may involve additional fees. Similar to car leasing, users also have the option to return the device at the end of the leasing period.

The leasing term for iPhone and Apple Watch is 24 months, while that for Mac and iPad is 36 months. Users must pass a soft credit check (which will not affect their credit score) to be eligible.

Background and Policy Adjustments

The program is being launched at a time when Apple has just raised the prices of several products, including Mac and iPad, by hundreds of dollars due to the industry-wide shortage of storage chips. The market broadly expects Apple to further increase prices when it launches the next generation iPhone in September.

Apple plans to promote Apple Upgrade as a more affordable monthly way to purchase devices. Meanwhile, the company will also discontinue new user registrations for two existing iPhone purchasing plans, including the iPhone Upgrade Program and the standard installment financing service, to make way for Apple Upgrade.

Unlike the current iPhone Upgrade Program, Apple Upgrade does not include AppleCare+ coverage. In addition, some products are not eligible for the program, including Apple Watch SE, entry-level iPad, iPhone 16, and MacBook Neo. Business purchases and educational discount orders are also excluded.

Apple previously considered launching an iPhone and hardware subscription plan funded by the company itself, but canceled these plans in 2024. By choosing to partner with Klarna, Apple can offer consumers a new way to purchase devices without bearing the related financial risks itself.