Apple Upgrade brings a monthly rental model for iPhone, iPad, Mac, and Watch, eliminating traditional installment plans and potentially steering the entire consumer electronics industry toward a subscription model.
On July 28, 2026, Apple unveiled Apple Upgrade, a new service that allows monthly rental of its most popular devices. Although the news was overshadowed the same day by the company briefly touching a market value of five trillion dollars, the long-term implications of this move could be far more significant for how we all purchase consumer electronics.
Unlike previous installment payment models, Apple Upgrade is designed as a true rental. Phones and watches can be rented for 12 or 24 months, while iPad and Mac contracts last 24 or 36 months. At the end of the period, users have three options: upgrade to the new generation, pay off the remainder and keep the device, or simply return it. The contract is terminated after three missed payments, and in the U.S. market, financial company Klarna, which manages the process, does not charge an additional fee for the rental itself.
With the introduction of Apple Upgrade, Apple is discontinuing its existing programs in the U.S., namely the iPhone Upgrade Program and iPhone Payments, which could cost users over $42 per month. The new projected amounts are significantly lower. For instance, renting an iPhone would cost $17.99 per month, an Apple Watch and iPad $11.99 each, and a Mac $24.99 per month.
This move is not Apple's first attempt to enter the world of hardware rental. According to earlier Bloomberg reports, an identical project was being developed by the team behind Apple Pay and was supposed to launch as early as 2023. The company shelved it due to technical challenges and growing regulatory pressure on its own financial ambitions. For the same reason, Apple Pay Later was also withdrawn after just one year. Now, by handing over financing and regulatory burdens to Klarna, Apple retains the key customer relationship.
The timing of the launch is no coincidence. Due to a global memory shortage, which Apple CEO Tim Cook called a "once-in-a-century flood," the company raised Mac and iPad prices by hundreds of dollars in June 2026. Although the iPhone has been spared for now, the first foldable iPhone is expected in September 2026 with a price tag above $2,000. A monthly cost of around $60 for such a device is psychologically much more palatable than a one-time expense.
This model directly addresses the challenge of increasingly longer device replacement cycles. According to data from research firm Counterpoint, the average replacement cycle has extended to about four years, up from 3.5 years last year. When sales slow, predictable and recurring rental income becomes crucial for stabilizing the business, especially for a company that generated $109.4 billion in revenue in the June quarter with 16% growth, but whose shares fell due to weaker projections.
With this move, Apple is not inventing a new model but legitimizing it. Samsung is already testing several rental variants: "AI Subscription Club" in Korea, "Galaxy Forever" with guaranteed buyback in India, and an annual upgrade program for the Galaxy S series. However, not all have succeeded. Google's Pixel Pass, launched in 2021, which bundled a phone and services into a single subscription, was discontinued after less than two years because it proved too complex and had too thin margins.
Apple's advantage lies in its ecosystem and retail network, allowing it to make rental a default option rather than just a side offering. The ultimate goal is ambitious: internally, there has been consideration of bundling device prices with subscriptions like iCloud+ storage, AppleCare, and streaming into a single monthly bill. Pieces of that puzzle already exist in the form of Apple One and AppleCare One bundles, so it is not hard to imagine a future where one amount covers all of Apple's hardware and services, turning the entire ecosystem into the largest subscription business in history.
