Apple’s reported upgrade program revamp could be a big downgrade

Bloomberg’s Mark Gurman reports that Apple is set to announce a new “Apple Upgrade” program (paywalled) next week to replace both its existing financing offerings and the iPhone Upgrade program. Details are still vague at present, but it will supposedly offer lease-style arrangements for not just iPhones, but Macs, iPads, and Apple Watches as well.

I’ve been in the iPhone Upgrade Program since Apple debuted it more than a decade ago. There have been plenty of ups and downs over that time—especially in the early years, when Apple was still figuring out how the whole program worked, but more recently it’s been pretty smooth.

And, I have to say, effective: I’ve had a new iPhone every year, without fail, and I’ve ended up paying only about half of what I would pay for a new phone outright.1

I do, however, have some concerns about the details Gurman does report. For one, the involvement of Klarna. They’re best known for their buy-now-pay-later service—a realm Apple was prepared to play in but ended up quickly abandoning. At the time I wondered if part of that about-face was Apple “perhaps not wanting to be in a business that can feel a bit troublesome.” But the company still subsequently partnered with other companies that offer that feature, like Affirm and, yes, Klarna.

Unlike the iPhone Upgrade program, this new offering will also reportedly not include AppleCare, meaning that you’ll have to shell out to protect the device you are leasing from Apple. There’s more than a whiff of “services revenue” around that, AppleCare now being somewhat more expensive than it was, and no doubt some will choose not to go through the hassle and additional cost of purchasing it, which in turn means a subset of those people who will invariably damage their phones and probably incur additional payments from Apple. AppleCare as part of the iPhone Upgrade Program was fundamentally a good deal because it insured devices that Apple was probably getting back, whether for eventual refurbishment or just for parts.

But the iPhone Upgrade Program often felt like an afterthought to Apple—for example, despite Apple officially telling me devices on it were eligible for the company’s restructured AppleCare One program, I heard from several users that this was effectively not the case.

Additionally, this part of Gurman’s story made me hesitate:

The Apple Upgrade service will work like a subscription and users can pay off the device early during their term, upgrade early to a new model or keep it at the end of the leasing period. In certain cases, those transactions will incur an additional fee. Like a car lease, it can also be returned at the end of the term. [emphasis added]

So “certain cases” and “an additional fee” are doing a lot of heavy lifting there. How many cases? What kind of fee? 9to5Mac’s Ben Lovejoy points out that if this really is structured like a car lease, that could mean some serious charges.

The iPhone Upgrade Program was, by comparison, straightforward. The cost of buying your phone was divvied up into 24 payments; after 12, you can upgrade. Loans were backed by Citizens Bank, but there were no interest charges or other fees. Hence it probably wasn’t a big money-maker. I don’t know what Apple’s deal with Klarna will be, but I’m skeptical that it’s going to be as consumer-friendly.

Finally, the other questionable part circling this is this report from 9to5Mac’s Marcus Mendes that code in iOS 27 suggests Apple will be able to restrict features of devices that fall behind on their payments:

The code describes a system called App Managed Features, which allows an authorized financing or provider app to enroll an iPhone and perform ongoing status checks.

If the contract is no longer in good standing, Apple’s system services can place the iPhone in “Restricted Mode,” which blocks access to most apps until the payment or contract issue is resolved, while keeping a small set of apps available.

Forget paying for heated seats, imagine if your car just decided not to offer CarPlay or, I don’t know, climate controls if you fell behind on your lease payments. This just feels, for lack of a better term, gross. Certainly predatory on lower income consumers who are most likely to take advantage of such a payment structure to buy an expensive phone.

As I said, details are still not concrete, so it’s always possible that this won’t be the exact situation. But if it is, I can say with some confidence that my days in Apple’s upgrade programs are at an end, and I certainly would be loath to recommend them to anybody.

How that compares to if I’d re-sold or traded in my old devices is, of course, an open question. But I avoided the hassle of having to do any of that. ↩