Speaker 0:  apple just announced a staggering 1,500,000,000 paid subscriptions across its platforms, pulling in over 300,000,000,000 in a single quarter. but before you buy into the headline numbers, know that this isn't a 1,500,000,000 human beings, and federal judges are actively sizing up the multibillion dollar toll booth apple uses to collect the cash. here is what tim cook's latest financial milestone actually means for your wallet. apple just announced its q three twenty twenty six earnings posting a 109,400,000,000 in total revenue and establishing a new june quarter record of 30,740,000,000 for its services division powered by 1,500,000,000 active subscriptions across its ecosystem. this milestone highlights apple's shift from a pure hardware maker into a high margin recurring revenue engine driven by icloud plus upgrades, apple one bundling, and more. however, with softer gaming revenue and intense legal pressure from epic games case and the eu digital markets act, questioning apple's proposed 5% to 15% fee on external payments. the long term economics of this subscription machine remains hotly contested. what do you think about this, john?

Speaker 1:  yeah. so the thing that really stood out to me was their apple upgrade. the apple upgrade program, right, is this new program launched in the states. they launched it in july. and, essentially, it lets customers lease eligible iphones, macs, ipads, and, apple watches through. and so depending on the product, the lease runs from twelve to thirty six months. and at the end, customers can return to the device, upgrade to another one, or make a payment to keep it. sounds like a car. right? so it is, essentially. apple upgrade is technically like leasing a car. it's not simply another installment plan. and this distinction is important because under a traditional installment plan, you're essentially spreading the purchase price of an asset over time and eventually owning it. what apple upgrade is structured around is leasing. and so they partner with calarna to provide the program. and so consumers undergo a soft credit check, and then iphones and apple watches can be leased for twelve to twenty four months, whereas macs and ipads have twenty four to thirty six month options. and so apple's advertising i think these are us dollars, starting payments of $17.99 per month for an iphone, $11.99 for an apple watch or ipad, and $24.99 for a mac. it's pretty cheap, to be honest, if we're if we're talking. if we're starting at $25 a month for a laptop, that's pretty cheap. and so at the end, you have your three choices. you either return it, you upgrade, or you buy it. and that's fundamentally different from apple's previous iphone upgrade program, which was limited to phones and use different financing structure. apple's upgrade, it replaces that program. i think this is only in the us for now, but, obviously, if it works, it's gonna come to canada. but i don't like this. i, like, i get it for a car because it depreciates, maybe. and so these devices also do depreciate, but not as much as cars. like, i could turn around and sell my 2012 macbook pro for quite a bit of money still. maybe not anymore that they moved to mac silicon, but i like to own my things. i don't know about you. what do you think about this?

Speaker 0:  i think, this is an interesting strategy to get people at a low margin into the system. it's a credit bet. and apple, like, have dipped their toes in the credit card market and in this kind of thing. i think it will be wildly successful at first, but i think it'll eat away at its long term sales. i think this is partially similar to when cars went to seven year leases or seven year, buying cycles. you can finance it over seven years because you're immediately underwater. and then all of a sudden, it takes so long, and then people are holding on to cars so much longer. the whole industry is starting to collapse as a result of they used to, do this every four years. but since you extended the to seven years, now they gotta use the car for ten years, and all of a sudden, people are buying at, you know, one third what they used to. so if you're gonna go trade your notebook back and you have to buy it because you dropped it or you dinged it up or you know? have you ever tried to trade in your phone at one of these places and they kinda immediately, the sale guy's trying to knock you down? oh, there's a little thing here and there's a little thing there and there's just the way they go. can you imagine? okay. well, i've had a year or two of my laptop, and i go to trade it in and say, well, i don't wanna buy it. well, great. you wanna give it back to us. that'll be, $1,700 in repairs. and, now you don't have a laptop, but you gotta owe us that money, or you can keep paying it and keep on with your laptop. so yeah. and by the way, buy applecare. so i think there is

Speaker 1:  a very interesting

Speaker 0:  i wonder

Speaker 1:  if the upgrade program includes applecare because that would make sense then if it includes

Speaker 0:  applecare. yeah. but i'm saying that people don't value stuff they don't pay for. so if you're paying 25 of bucks and you don't own your laptop, you have much more chance of dropping in the toilet for no reason whatsoever than if you paid $2,500 or $5,000 for it. and i'm just saying because just it's that perception. right? so your applecare only counts for so much. i think there's gonna be a situation here, but these kinds of things are wildly successful for a number of reasons. right? because if we can say as a company, as a start up, i can now use this apple thing simply to say, okay. i got 10 employees. it's this much. if i add a machine, i know it's only x dollars a month over this financing period. about, everyone coming in needs a $5,000 machine, and i have to figure out how to pay for that. we have this thing structured. so i i just think there are some interesting strategies here. it's nothing that you couldn't really have done before by, you know, financing the purchase other ways.

Speaker 1:  yes.

Speaker 0:  apple just wants to keep you in their ecosystem.

Speaker 1:  yeah. the smart thing that apple is doing with this is because they have a problem that pretty much every mature smartphone company faces, that their devices today are good enough that people don't necessarily need to replace them frequently. so if someone looks at a 1,200 or $1,500 price tag, they may decide, you know what? my current phone, it works fine. but a monthly price changes that comparison. so instead of evaluating a $1,200 new phone versus $0 to keep in my existing phone, a customer may think $30 something per month for the newest phone versus keeping my old one. and that's a much easier purchasing decision nowadays for customers. and so, the strategy is relevant in 2026 because apple's upgrades are very minimal with their iphones nowadays, with their one from one phone to the next. so like you said, keeping people in their ecosystem, is smart. and then this way, they've got this recurrent monthly recurring revenue. it made sense. but i think you have a person you'd rather own your devices, or do you think you'd take advantage of this?

Speaker 0:  so i don't think i will take advantage of this. but i could be wrong because who knows? at some point, i might want a machine that will wanna roll out bigger. we're just talking about expensive mac studio and whatnot. so i'll take a step back. but from a phone point of view, they just want that money back from all the telcos, at and t and whatnot. so instead of paying them the $20 a month for the phone, you'll pay apple $20 per month for the phone. yeah. so they have better financing options. because before, if you wanted to buy your phone from apple, they really wanted you to just buy your phone from apple. so come, you know, give us your $1,200 for the phone, and here you go. now they've got a plan that says, hey. $25 a month, we can match, your telcos and you can stick with us and have our, upgrade path and whatnot. and it gives people options so they're not necessarily locked into a telco and can still upgrade the phone and switch whatnot. so there is some interesting stuff here. i like that it's expanding to other hardware levels. i will be interesting to see. most of these types of programs tend to be financially successful. i rolled out a program with bell mobility. i'm not gonna talk about it right now, but, a warranty program or device replacement program, it was wildly successful. brought in millions and millions per month. so it was just these kinds of things tend to do well. and if you have a choice, if you love apple but you don't like at and t, this is for you kind of thing.

Speaker 1:  yeah. yeah. and in a sense, it's actually funny that we're talking about this. there was an article that i didn't read yet, but it's saying that this is in canada specifically. the crtc is now allowing mobile providers to lock phones again. we'll dive into that another time maybe. but, yeah, just it's funny that with apple doing this and now with crtc allowing, yeah, there's there's some interesting stuff happening. so

Speaker 0:  alright. so we missed a bunch of stuff, but there's more information on where those subscription coming from, what are those actually 1,500,000,000 users, is apple kinda getting in trouble, what's the results of this, epic games lawsuit is five to 15% gonna fly with eu. go check out our website at torontostarks.com where this article is to get that info. apple's 1,500,000,000 subscription figure proves their dominance in monetization, but the impending legal rulings over app store commissions will determine if those high margin services can maintain their momentum. you know, as an example, apple's free icloud space has remained at five gig forever. you can't literally back up your phone to the cloud anymore. so they're stuck at this level. somebody's gonna have to say something around this. hardware go ahead.

Speaker 1:  yeah. no. go ahead.

Speaker 0:  i'm about to wrap it up. so give us your thoughts, and then we'll wrap it up.

Speaker 1:  yeah. so well okay. i i had more stuff, but you can wrap it up then.

Speaker 0:  no. go ahead, dean. if you wanna keep going, go ahead.

Speaker 1:  well, no. but, like so they like, we didn't like, we touched on it a little bit. like, they have a massive subscription infrastructure already. so you've got, like you said, your icloud. you have apple music, apple tv, apple arcade, fitness plus, news plus, their apple care, app store subscriptions, third party subscriptions through apple's ecosystem. and so, like, the apple upgrade system is more consequential than apple tv or apple music or any of these subscription. it just like, what apple has done is they've added these subscriptions. like, they have all these different subscriptions. and now this is like, okay. you have all these subscriptions. why not just subscribe to the device and all and subscribe a device instead. right? so i get where they're coming from, and it makes sense. that's it. so

Speaker 0:  hard hardware requires the customer, but data friction keeps them paying indefinitely. so what's your take? are you using apple one, or do you actively avoid a platform subscription bundles? are you gonna move to a hardware subscription with apple away from, say, someone else or a different financer where you would finance your laptops through a bank or whatever anyway and write them down as expenditure? it's just a different way of looking at it. are you gonna take advantages of the subscriptions that are happening with apple, or are you gonna pass? let us know what you think in the comments below.