Apple wants to earn recurring revenue from the iPhone: here’s how
- Apple Inc is expected to launch a hardware subscription bundle this fall.
- CNBC's Steve Kovach says it will drive the next level of growth for Apple.
- Apple shares are currently down nearly 25% versus the start of the year.
It’s been fifteen years since Steve Jobs introduced the world to the first iPhone, but Apple Inc (NASDAQ: AAPL) still has a few tricks up its sleeve to generate recurring revenue from the handset.
Apple is working on a hardware subscription bundle
The American multinational is expected to launch a hardware subscription bundle this fall that will likely drive the next level of growth for the iPhone maker, says CNBC’s Steve Kovach.
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This fall we’ll get the long-awaited so-called Apple Prime Plan where you can sign up to get an iPhone every year and then bundle in a bunch of [Apple] services. I think that’s where the next level of growth could really come from.
Subscription revenue is a bigger and better news for Apple shareholders who have been concerned about the services revenue for it not being “recurring”.
iPhone remains a vital part of Apple’s strategy
iPhone revenue was up 5.5% in fiscal Q2 versus 9.0% in the prior quarter. Still, Kovach reiterated that the handset continues to be the front and centre of the Apple ecosystem. He noted:
Everything Apple does ties back to the iPhone. Sure, they sell gazillions of units every year, but it’s the stuff they layer on top of that, that’s been driving growth. That means AirPods, that means Apple Watch, that means the services business.
Amidst the broader risk off in tech stocks, Apple is down nearly 25% year-to-date. Wall Street currently rates its shares at “overweight”.