Apple Teams With Klarna on New Plans

Apple is preparing to launch a new hardware subscription service called Apple Upgrade, which will bundle iPhones, iPads, Macs, and Apple Watches into a single monthly plan, according to reports. The program is being developed in partnership with financial technology company Klarna Group Plc and will debut exclusively in the U.S., available at Apple Store locations and online.

How the subscription works

The service will operate similarly to a device leasing model, allowing customers to pay off their balance early, upgrade to a newer device before the contract ends, or keep the hardware outright at the end of the term. Some scenarios may involve additional fees. Contract lengths will vary by product: 24 months for iPhones and Apple Watches, and 36 months for Macs and iPads. All applications will require credit approval, and users can return the hardware when the contract concludes.

Apple plans to position Apple Upgrade as a more affordable alternative to traditional financing. To streamline its consumer purchasing options, the company is expected to phase out its existing iPhone Upgrade Program and other financing routes in favor of this unified model.

The new program comes with key differences. Unlike the previous iPhone offering, Apple Upgrade will not include AppleCare coverage. Entry-level devices—such as the Apple Watch SE 3, base iPad model, standard iPhone 16, and MacBook Neo—will also be excluded. Enterprise accounts and student users won’t qualify for the subscription.

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Rumors of an Apple hardware subscription service have surfaced for years, with internal reports suggesting the project was shelved as recently as late 2024. The timing of its revival aligns with recent price increases across Apple’s product lineup, driven by rising costs for dynamic random-access memory (DRAM) chips. Those components have seen surging demand due to the global push for AI-focused hardware.

For consumers, the shift could mean more flexibility in how they pay for devices, though the exclusion of AppleCare and entry-level models may limit its appeal. The program’s success will likely hinge on whether the trade-offs—especially for users who prioritize warranty coverage or prefer budget-friendly hardware—prove worthwhile.

Klarna’s involvement suggests Apple is leaning on external financial expertise to structure the program, a departure from its usual in-house approach to consumer financing. The partnership could also help Apple manage risk, given the credit approval requirements and the potential for early upgrades or returns. Customers will be a key test for the company’s broader subscription strategy.

It is a significant change.