As its iPhone sales have fallen, Apple has begun focusing on alternative sources of revenue, like its lucrative Services division. Much of the company’s presentation for the iPhone 11 was spent demonstrating games and projects related to Apple TV. Apple wants to be a major media provider and it’s hoping you’ll reward it with lots of content purchases.
One change to AppleCare+ flew a bit under the radar. Up until now, AppleCare was a 24-to-36-month extended warranty available from Apple on various iDevices like MacBooks, iPhones and iPads. The company has typically billed a single flat rate for the service interval, though many repairs still cost money, even if you’ve purchased AppleCare+.
Now, Apple is making a change to the program. The good news is, you’ll be able (in theory) to buy AppleCare+ for a longer period of time. The bad news is, it’s going to cost you more by default even for the period of time that the program normally covers if you choose to pay by the month.
The screenshot above by 9to5Mac shows pricing for AppleCare+ for the Apple Watch Series 5 and the iPhone XR. Paying month-to-month (you’ll be re-upped automatically) is essentially a subscription, even if Apple isn’t calling it that. But if you do the math, you’ll see that the month-to-month program costs significantly more. Over two years, you’ll pay $95.76 instead of $80 for AppleCare+ if you slap it on the Apple Watch. As for the iPhone XR, the two-year fee comes out to $191.76, up from $150. That’s roughly 1.2x more over the same period of time. The up-front pricing on the iPhone 11 is $149, while up-front cost on the iPhone 11 Pro is $199.
Apple’s legal document states:
For Monthly Plans, your Plan Term is one (1) month. Your Plan will automatically renew each month unless cancelled as set forth in the “Cancellation” Section 9 below, including in the event that Apple is no longer able to service your Covered Equipment due to the unavailability of service parts, in which case Apple will provide you with thirty (30) days’ prior written notice of cancellation, or as otherwise required by law.
There’s no more option to buy a fixed-term service plan and then pay for it at a monthly reduced rate. Instead, you can pay for 24 months of coverage upfront at one price or simply go on the month-to-month program. While the end result of this is that people will be able to have AppleCare+ for longer periods of time on the same device, it’ll also mean paying Apple more money for the privilege of doing so.
If anything, we suspect this change is a nod to the fact that users often keep their devices for longer periods of time these days. Reports have suggested that Americans now only replace their iDevices closer to every three years, rather than every two. Converting customers to a small monthly fee for AppleCare+ gives Apple a steady monthly revenue stream that replaces some of the sales revenue it loses when it sells fewer iPhones. The fact that customers are being billed monthly would also help smooth revenue quarter-over-quarter — people only buy a new device every few years, but if they pay you $8 a month, that’s revenue you can count on. Multiply that by some millions of customers, and you’ve got a hefty chunk of reliable income. Apple, these days, is all about reliable income.