Smartphone buying vs subscribing: new ownership models reshape the market

Smartphone makers are increasingly looking beyond the devices themselves and competing on how customers get them. This week Apple introduced Apple Upgrade in the United States, developed with Klarna, letting people lease an iPhone, Mac, iPad or Apple Watch for a monthly payment and later upgrade, return or buy the product. In India, Samsung has been running Galaxy Forever, a program that pairs financing with a guaranteed trade-in value for flagship Galaxy phones.

Longer replacement cycles are prompting these experiments. Counterpoint Research expects global average replacement cycle to reach four years in 2026, compared with 3.5 years in 2025. IDC data show U.S. premium smartphone owners now keep devices for about 42 months, up from 38–40 months in earlier years. Rising prices, tighter component supply and only modest hardware improvements have made older phones good enough for longer, reducing opportunities for new sales and limiting supply to refurbished markets.

Analysts say leasing and buyback models depend on a healthy secondary market. Max Weinbach of Creative Strategies told TechCrunch that such programs cannot work unless devices enter the used and refurbished market. The challenge is also financial perception. Matt Schulz of LendingTree said leasing suits people who upgrade often, while consumers who keep a phone for three to five years are usually better off buying it outright. Weinbach’s analysis suggests frequent upgraders may pay about the same or sometimes less than buying and later trading in, especially for high-storage versions whose trade-in values lag their price.

Phone makers are not only trying to make devices affordable. Navkendar Singh of IDC said the real driver is protecting margins and retaining customers as pricing pressure mounts. Monthly payments can keep users inside a brand’s ecosystem. Carrier financing has long made premium phones easier to afford in the U.S., but manufacturers now want to control that relationship themselves. IDC’s Nabila Popal said 36-month interest-free financing and trade-in offers of up to $1,100 have helped push U.S. average selling prices to the highest globally, and helped Apple and Samsung hold more than 80% of that market.

Startups are also entering the space. BytePe in India says more than 80% of its customers pick subscriptions over outright purchases or traditional installment plans; CEO Jayant Jha told TechCrunch that typical users are young professionals in early jobs. Britain’s Raylo and Germany’s Grover already lease electronics on monthly plans. Tarun Pathak of Counterpoint expects more such offers in premium phones, but believes financing will remain the main affordability tool. Mandeep Manocha of Cashify predicts leasing and ownership will coexist. Popal expects Apple Upgrade to have a larger effect on Mac sales than iPhones, saying it will likely expand existing financing options rather than radically change U.S. buying habits.