Apple Inc. (AAPL.US) teams up with Klarna (KLAR.US) to launch the "Apple Upgrade" leasing plan in an attempt to boost hardware sales through a subscription model.

Facing rising costs and demand pressure, Apple Inc. (AAPL.US) is preparing to make a major adjustment to its sales model. According to sources, Apple Inc. plans to officially launch a device leasing service called "Apple Upgrade" in the United States on July 28th and will be partnering with the Swedish financial technology company Klarna (KLAR.US) as a funding support, to attract users with lower monthly payment thresholds and stimulate sales. This new service will first be launched in Apple Inc.'s offline retail stores and online channels in the United States, covering most iPhone, Mac, iPad, and Apple Watch models. Apple Upgrade is more like a hardware subscription: users who pass a soft credit check can choose to pay off the device early during the lease period, upgrade to a new model early, or keep the device after the lease is up (may involve additional fees in certain situations), or return the device directly after the lease, similar to a car lease. The lease terms are 24 months for iPhone and Apple Watch, and 36 months for Mac and iPad. Apple Inc. plans to promote Apple Upgrade as an option with lower monthly payments compared to the current installment plans. As a result, the company will stop new registrations for the "iPhone Upgrade Program" and standard installment plans, paving the way for the new plan. Unlike the existing iPhone upgrade plan, Apple Upgrade does not include AppleCare services, and certain devices such as Apple Watch SE, entry-level iPad, iPhone 16, and MacBook Neo are not included. Business and educational purchases are also excluded. One of the main reasons Apple Inc. is launching the leasing service is the significant increase in hardware costs. Due to the massive demand for storage chips caused by the construction of artificial intelligence (AI) industry data centers, Apple Inc. has recently raised prices by hundreds of dollars for products like Mac and iPad, and it is widely expected that the company will raise prices for the new generation iPhone to be released in September. By introducing a more flexible leasing model, Apple Inc. is trying to offset the suppression of consumer willingness caused by price increases. In fact, Apple Inc. had previously planned to launch its own hardware subscription service, but canceled the plan in 2024. By using Klarna to take on financial services, Apple Inc. is able to test subscription sales while avoiding direct financial risks. After the news broke, Klarna's stock price surged by 11% to $20.78 in mid-day trading on Tuesday, while Apple Inc.'s stock price remained largely unchanged. As of the time of writing, neither Apple Inc. nor Klarna have responded to requests for comments.