Should you still buy your next smartphone — or subscribe to it instead?

Apple has introduced a new leasing program in the U.S., partnering with Klarna, allowing users to lease iPhones, Macs, iPads, or Apple Watches for a monthly fee. The initiative, called Apple Upgrade, gives customers the flexibility to upgrade, return, or eventually purchase the device. This follows similar efforts by Samsung, which offers its Galaxy Forever program in India, blending financing with a guaranteed buyback to facilitate predictable upgrades of flagship Galaxy smartphones. The move reflects broader shifts in the smartphone industry, as rising device costs and extended ownership periods have made traditional purchasing models less appealing. According to Apple CEO Tim Cook, the Upgrade program aims to help customers, especially those who regularly upgrade, access the latest products through a leasing plan. He emphasized that Apple's high resale values support this model, making it viable for frequent upgrades. Consumers are keeping their smartphones longer due to increasing prices and slower hardware improvements. Tighter supply chains have driven up costs for components like memory, while incremental updates have kept older devices functional for extended periods. This has reduced the frequency of new purchases and slowed the influx of secondhand devices into the growing refurbished market. Analyst firm Counterpoint Research predicts the global average replacement cycle will extend to four years by 2026, compared to 3.5 years in 2025. In the U.S., premium smartphone users now retain their devices for an average of 42 months, up from 38 to 40 months in prior years, according to market intelligence firm IDC. This trend has pushed manufacturers to explore alternative ownership models, including leasing, subscriptions, and guaranteed buyback programs. Analysts suggest these programs rely heavily on a functioning secondary market. Max Weinbach of Creative Strategies noted that without a robust used or refurbished market, such initiatives would struggle. He explained that leasing and buyback options encourage devices to enter the secondary market, thereby sustaining it. However, convincing consumers that these models offer better value than outright purchases remains a challenge. Matt Schulz, chief consumer finance analyst at LendingTree, cautioned that leasing isn't suitable for everyone. Those who keep their phones for three to five years typically benefit more from buying outright. For frequent upgraders, though, the cost difference between leasing and buying might be minimal, especially with higher-storage models where trade-in values don't fully match purchase prices. Weinbach further pointed out that Apple’s program is designed so users intend to upgrade every 12 to 36 months. His analysis suggests that frequent upgraders could end up paying similar or even lower amounts over time compared to buying outright and trading in later. Beyond affordability, smartphone companies view these programs as tools to maintain customer loyalty. As devices grow more expensive and replacement cycles lengthen, retaining users within brand ecosystems becomes crucial. Navkendar Singh, associate vice president of devices research at IDC, highlighted that the primary goal is not necessarily shorter upgrade cycles but protecting profit margins and ensuring customer retention amid rising price pressures.