The next phase of competition in the smartphone market may not revolve around the devices themselves but rather on how consumers access them. With the rising costs of high-end devices, companies like Apple and Samsung are exploring leasing, subscription models, and assured buyback schemes to encourage more frequent upgrades.
Recently, Apple introduced the Apple Upgrade program in the U.S., collaborating with Klarna to enable consumers to lease devices such as iPhones, Macs, iPads, and Apple Watches. Customers can pay a monthly fee with options to upgrade, return, or buy the device at a later date. In India, Samsung has launched its Galaxy Forever initiative, integrating financing with a guaranteed buyback program to facilitate more predictable upgrades for Galaxy flagship smartphones.
During a recent earnings call, Apple’s CEO Tim Cook highlighted that the Upgrade program is designed to simplify access to the latest Apple products for customers who prefer regular upgrades. He pointed out that Apple’s high resale values align well with this leasing model.
As users keep their smartphones for longer periods—due to increasing prices and marginal improvements in older models—manufacturers are facing challenges. This extended usage reduces opportunities for selling newer devices and slows the influx of phones into the refurbished market. According to Counterpoint Research, the average global replacement cycle is projected to extend to four years by 2026, compared to 3.5 years in 2025.
In the U.S., premium smartphone users maintain their devices for an average of 42 months, an increase from previous averages of 38 to 40 months, as reported by IDC. This trend has pushed smartphone manufacturers to consider alternative options like leasing and subscription services.
“These initiatives rely on having a viable secondary market,” stated Max Weinbach, an analyst at Creative Strategies. “To sustain a refurbished device market, it’s essential that older devices are cycled back in, which is facilitated by leasing and buyback options.”
However, the challenge for the industry is not just about encouraging quicker upgrades, but also convincing consumers that these new ownership methods offer better financial advantages compared to outright purchases.
Evaluating Leasing Options
“Leasing isn’t suited for everyone, but it can be ideal for those who upgrade frequently,” said Matt Schulz, a chief consumer finance analyst. He added that individuals who keep their phones for three to five years usually find it more cost-effective to buy outright rather than engage in leasing or subscription plans.
For those upgrading every one to two years, the financial implications might be closer than they seem. “It is essential to note that this is an upgrade plan carried out through leasing, not merely a leasing initiative,” explained Weinbach. “The goal is for participants to return their devices every 12 to 36 months, aligning with their upgrade intentions.”
Weinbach’s analysis indicates that frequent upgraders might end up spending about the same—or even less—through the Apple Upgrade program compared to outright purchases, especially for higher-storage models where trade-in values do not always match their original prices.
These initiatives aim not only at enhancing affordability but also at retaining customers within the brands’ ecosystems as device costs rise and replacement intervals prolong.
“The main driving force isn’t just the urge for quicker upgrades; it’s about maintaining margins and customer retention in a price-pressured market,” explained Navkendar Singh, an IDC research executive. Tech companies are increasingly shifting from transactions to structured monthly payments that help retain customers within their ecosystems.
The concept of monthly payments for smartphones is not novel, particularly in the U.S., where carriers have long offered financing linked to service contracts. However, manufacturers are now striving to manage this relationship more directly.
Carrier financing has significantly aided in making premium smartphones accessible in the U.S. “Interest-free financing over 36 months and significant trade-in allowances have contributed to the highest average selling prices for smartphones in this region,” commented Nabila Popal, a senior director at IDC.
Current financing programs and trade-in deals have allowed Apple and Samsung to capture a substantial share of more than 80% of the U.S. smartphone market, according to IDC.
The movement towards subscriptions and alternative ownership models is also paving the way for startups. Companies like BytePe in India provide subscription-based plans for smartphones, with over 80% of their customers preferring subscriptions to outright purchases. Founder Jayant Jha mentioned that their typical clients are younger professionals seeking premium devices without hefty upfront costs.
This trend spans beyond the U.S. and India, with firms like the UK’s Raylo and Germany’s Grover focusing on leasing smartphones and consumer electronics through monthly subscriptions.
Analysts predict that more businesses will adopt these models. “The primary aim is to enhance customer lifetime value through improved retention, structured upgrade cycles, and ensuring a steady stream of trade-in devices for refurbishment and resale,” remarked Tarun Pathak, a research director at Counterpoint Research.
Pathak anticipates that initiatives like these will become increasingly prevalent in the premium smartphone sector, although financing will remain a critical tool for making devices affordable.
However, traditional outright ownership won’t vanish anytime soon. Mandeep Manocha, co-founder of an Indian trade-in and refurbishment platform, predicts that leasing, subscriptions, and outright purchases will coexist rather than replace each other.
“Each model has its place in the market,” noted Manocha, emphasizing that while a transition from full ownership to leasing may occur, it will be a gradual process.”
This is particularly true in the U.S., where carrier financing has historically dominated the landscape of premium smartphone purchases. IDC’s Popal suggests that Apple’s new Upgrade program may influence Mac sales more significantly than iPhone sales, indicating that it is designed to enhance financing options rather than drastically change how Americans approach their smartphone purchasing decisions.
When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.
