Apple is launching a new subscription-style device leasing service in the United States later this month as the iPhone maker looks to stimulate hardware demand, lower the upfront cost of its products for consumers, and adapt to rising component costs fueled by the artificial intelligence boom.
According to a Bloomberg News report citing people familiar with the matter, the new service, called Apple Upgrade, will launch on July 28 and will allow customers to lease eligible Apple devices with the flexibility to upgrade early, keep their device at the end of the term or switch to a newer model before the lease expires.
The move marks one of Apple’s biggest changes to its consumer financing strategy in years and comes as the company faces mounting pressure from higher hardware costs, slowing replacement cycles and intensifying competition in premium consumer electronics.
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Under the program, Apple is partnering with Swedish buy-now-pay-later giant Klarna as the financing provider. The service will initially cover most iPhone, iPad, Mac and Apple Watch models and will be available through both Apple’s retail stores and online channels.
Unlike conventional installment financing, Apple Upgrade will function more like a subscription service, allowing customers greater flexibility over device ownership while lowering monthly payments compared with Apple’s current financing plans.
Bloomberg reported that Apple intends to phase out new enrollments in its existing iPhone Upgrade Program and standard financing options, effectively replacing them with the new leasing platform.
The company also plans to exclude several lower-priced products from the service, including the iPhone 16, MacBook Neo, Apple Watch SE and the entry-level iPad. Business and education purchases will also not qualify.
Notably, the new offering will not bundle AppleCare, marking a departure from the current iPhone Upgrade Program, where Apple’s extended warranty and accidental damage coverage are included.
The leasing initiative arrives as Apple grapples with rising manufacturing costs across its product lineup. The company has increased prices on several devices, including MacBooks and iPads, after memory and storage chip prices climbed sharply amid unprecedented demand from AI data center operators. The iPhone has so far been spared from broad price increases, reflecting Apple’s efforts to protect demand for its flagship product in an increasingly competitive smartphone market.
The launch comes amid the industry’s shift toward subscription-based hardware ownership. Rather than relying solely on one-time device purchases every few years, manufacturers are increasingly adopting recurring revenue models that generate predictable cash flow while encouraging customers to upgrade more frequently.
For Apple, shortening replacement cycles has become important as global smartphone growth matures. Consumers are holding onto devices longer, making it harder for manufacturers to sustain hardware revenue growth without introducing new financing models or breakthrough products.
The strategy mirrors trends across the automotive and enterprise technology sectors, where leasing and subscription models have become an important way to retain customers while reducing upfront purchase costs.
Partnering with Klarna also expands Apple’s financing ecosystem beyond traditional banking partners. Klarna has been aggressively growing its presence in consumer electronics financing as buy-now-pay-later providers seek larger-ticket purchases beyond online retail.
The move is also expected to strengthen Apple’s high-margin services ecosystem by encouraging users who lease devices to remain within its ecosystem of subscriptions, including iCloud+, Apple Music, Apple TV+, Apple Arcade and other digital services throughout the life of the lease.
The rollout is expected to attract interest from both investors and analysts, who would assess whether the new program can help offset slowing hardware sales while supporting customer retention as AI-driven component inflation continues to pressure device manufacturing costs.
The initiative also comes as Apple prepares for its next wave of AI-enabled products, making it easier for consumers to upgrade to newer devices capable of supporting increasingly advanced on-device artificial intelligence features.