Apple Inc. has halted work on a project to build an iPhone hardware subscription service, according to people familiar with the matter, retreating from an attempt to change the way consumers buy its flagship device.<\/p>\n\n\n\n
The idea was to make owning an iPhone like subscribing to an app \u2014 with consumers paying monthly fees and getting new phones each year \u2014 but Apple recently wound down the effort, according to people familiar with the matter. <\/p>\n\n\n\n
The team was disbanded and reassigned to other projects, said the people, who asked not to be identified because the work was confidential.\u00a0<\/p>\n\n\n\n
The move is part of a broader shift in how Apple approaches payment services. <\/p>\n\n\n\n
The subscription effort was overseen by the company\u2019s Apple Pay group, which also shuttered a \u201cbuy now, pay later\u201d program earlier this year.<\/p>\n\n\n\n
That service let shoppers pay off purchases over multiple installments, but Apple is now steering consumers toward third-party programs instead.<\/p>\n\n\n\n
Bloomberg News\u00a0first reported on\u00a0the iPhone subscription service in 2022, when the program was due to launch by the end of that year. <\/p>\n\n\n\n
It was ultimately delayed until 2023 \u2014 and beyond \u2014 after suffering numerous setbacks, including software bugs and regulatory concerns. <\/p>\n\n\n\n
Top company executives had sent the work back to the drawing board before the project was finally scrapped.<\/p>\n\n\n\n
A representative for Cupertino, California-based Apple declined to comment. <\/p>\n\n\n\n
When Apple began work on the hardware subscription service a few years ago, it was\u00a0aiming to sell more\u00a0iPhones and generate a greater amount of recurring revenue. <\/p>\n\n\n\n
The device is Apple\u2019s biggest moneymaker, accounting for just over half of annual sales. <\/p>\n\n\n\n
The company also wanted to further lock users in to the Apple product ecosystem.<\/p>\n\n\n\n
It would work like this: Instead of paying for an iPhone outright or signing up for an instalment plan, customers would have a monthly fee billed to the same Apple account they use for downloading apps and subscribing to services. <\/p>\n\n\n\n
They\u2019d then be able to swap out their iPhone for a new model each year.<\/p>\n\n\n\n
Like the now-defunct Apple Pay Later program, the hardware subscription would use an in-house financial infrastructure and be based on loans\u00a0provided by the company<\/a>\u00a0itself.<\/p>\n\n\n\n Early this year, Apple deployed the iPhone subscription service as a test for employees within its Pay group. Teams working on App Store billing and the online store were also involved.<\/p>\n\n\n\n The service would have competed with \u2014 and likely upset \u2014 Apple\u2019s wireless carrier partners, which increasingly rely on instalment programs and promotions to sell iPhones and retain customers.\u00a0<\/p>\n\n\n\n It also may have replaced two programs long offered by Apple itself. That includes the iPhone Upgrade Program, which splits up the cost of a phone over two years and is backed by loans provided by Citizens Bank NA. <\/p>\n\n\n\n The other is Apple Card Monthly Installments, which is handled by Goldman Sachs Group Inc. and is only available in the US.<\/p>\n\n\n\n The Apple Pay organisation is led by Jennifer Bailey, a top deputy to services chief Eddy Cue. <\/p>\n\n\n\n The group has sought to expand the company\u2019s services revenue in a complex and highly regulated financial industry \u2014 no easy task. <\/p>\n\n\n\n A few years ago, it initiated \u201cProject Breakout,\u201d\u00a0an effort to build<\/a>\u00a0internal tools and rely less upon partners from the financial industry.<\/p>\n\n\n\n When the company cancelled Apple Pay Later, a major factor in the decision was stricter rules by the Consumer Financial Protection Bureau. <\/p>\n\n\n\n