Bid Adieu To The Ownership Economy – Auto Subscriptions?

Wow, now this!   Car subscriptions?  The end of auto dealerships?

Recurring revenue is the new gold.   Microsoft was a wet dawg for years until it moved Windows Office to a monthly subscription basis, which locks in users to a monthly nut rather than relying on a sale and upgrade of the software for, say, once every five years.   The development of the cloud also helped.

Recurring Revenue

The market also tends to value the predictability of recurring revenue with a heftier multiple rather than companies with revenue dependent on transactional sales.

Not surprised then to read that even Tim Cook is not ruling out moving Apple’s iPhone to a subscription basis, probably driven out by the reality consumers just are not upgrading and buying the iPhone as they once did.

Under the argument for an iPhone subscription, which some people call Apple Prime after the Amazon program of the same name, Apple would bundle hardware upgrades with services such as iCloud storage or Apple TV+ content and hardware for a single monthly fee. This would let it switch iPhone sales from a transactional model to a subscription model, potentially driving the stock price up without having to increase product sales or prices dramatically.

During Wednesday’s earnings call, when analyst Toni Sacconaghi asked about the idea of a prime subscription, Apple CEO Tim Cook did not shoot down the idea. In fact, he suggested that something like it was already in effect. – CNBC


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1 Response to Bid Adieu To The Ownership Economy – Auto Subscriptions?

  1. Pingback: Bid Adieu To The Ownership Economy – Auto Subscriptions? - Free World Economic Report

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