Is Owning Tech Dead? The Rising Shift Toward Renting Devices

Upgrading your tech should be exciting. Keeping up with the latest iPhone or unboxing a new work laptop brings a sense of renewal – it’s a fresh perspective, a clean slate free of digital clutter and an instant boost to your productivity. 

But the triple threat of inflation, rising taxes and the AI boom’s stranglehold on the tech supply chain has turned upgrading devices into a financial headache.

The gaming industry is already feeling the squeeze.

Sony, for instance, recently hiked the price of the PlayStation 5 by roughly £90 (US$119) – a move driven by soaring component costs, global economic pressures and a tightening supply chain. 

Microsoft has also raised its hardware prices and analysts warn that Nintendo could soon follow suit.

At the heart of the issue is the cost of memory chips, which have risen in price as manufacturing supply is diverted to fuel AI data centres. 

“Hyperscalers are really stocking up all of the chip supply to build out their AI infrastructure and they are the same components that are in a smartphone, tablet, gaming console or laptop,” explains Karl Gilbert, Co-Founder and CEO at Raylo.

“OEMs are facing a big problem with manufacturing costs due to this. Ultimately these brands have three choices: put up their prices – which they’ve started to do – take down some of the margin themselves or subsidise the product with interest-free financing.”

The hidden cost of retail finance

For years, electronics brands and retailers have relied on long-dated, interest-free credit options – such as 36-month payment plans – to make expensive devices look affordable. 

However, this strategy hides a costly reality for the brands themselves.

To offer interest-free financing, merchants must pay a massive upfront subsidy to the finance provider, sometimes as high as 15% of the product’s value.

In the electronics industry, where profit margins are already thin, this upfront cost severely eats into profitability. Worse still, this model creates a subsidy trap.

“Instead of just attracting new, budget-conscious buyers, these interest-free plans are often utilised by affluent customers who were already prepared to pay the full price outright,” Karl says. 

“As a result, brands end up needlessly subsidising demand they had already generated. This triggers a damaging cycle where a customer who historically upgraded their device every 24 months is locked into a 36-month payment contract.

“By stretching out the upgrade cycle, brands are hit with a double blow: lower profit margins on the initial sale and a lower lifetime value from the customer over time.”

The subscription solution

This is where subscription platforms like Raylo offer an escape route from the subsidy trap. 

Raylo provides device subscriptions directly to consumers and small businesses, while also collaborating with major brand partners and OEMs like Apple, Dyson, LG and Samsung to offer a more sustainable alternative to retail ownership. 

Because manufacturing costs are soaring and driving up retail prices, the value of used and refurbished tech in the secondary market has skyrocketed. 

Instead of bleeding margins to fund retail finance, Raylo’s subscription model actually leverages this high residual value.

By factoring in what the device will be worth when it is returned, Raylo can offset the current wave of inflation.

“We are effectively leveraging the future value of these devices as part of our proposition,” Karl says. 

This allows the monthly subscription price for consumers to remain highly affordable, even as the retail price of new tech climbs. 

For electronics brands, moving from rigid finance plans to a flexible subscription model solves their biggest modern headaches. It keeps monthly costs low for the consumer, shortens the upgrade cycle back to a predictable rhythm and helps manufacturers maintain high conversion rates and consistent growth in a brutal economic climate.

The market appetite for this shift is already clear. Raylo has amassed just over 200,000 active subscribers in the UK, generating £70m (US$94m) in annual recurring revenue.

Karl says the shift to subscriptions is deeply rooted in the financial realities of modern retail.

“This is all about the commercial outcome for the brand, and commercials for them really come down to revenue growth and ultimately customer lifetime value," he says.

“85% of customers who take a Raylo subscription say they wouldn’t have bought the product or they would have delayed the purchase. So we’re really able to bring this incremental audience into the conversion funnel for brands.”

By tapping into this new pool of buyers who would have otherwise walked away, brands can instantly boost their conversion rates. But the financial benefits don’t stop at just winning over hesitant shoppers. 

Karl notes that subscription models also radically change what people buy and how often they return.

He says: “We see between 30-50% higher average order values or average selling prices than brands who don’t use Raylo, and our customers upgrade 12 months sooner on average versus customers who are either on another programme or traditional finance. 

“We convert customers sooner, we bring these incremental customers in, and when they do convert, they take a 30 to 50% higher-spec device and they upgrade faster.”

By compressing the upgrade cycle by a full year and encouraging users to opt for premium hardware, subscription frameworks effectively solve the industry’s two biggest headaches.

They maximise the lifetime value of the customer while giving tech brands a predictable, recurring revenue stream in an otherwise volatile market.

Goodbye to buying, hello to having

The financial shift Karl refers to aligns with a broader cultural evolution in how we view our possessions. 

The traditional obsession with permanently owning our tech is fading, replaced by a preference for flexibility where the definition of what it means to own something has shifted for the modern user. 

“The modern customer doesn’t think about ownership in such an absolute form,” Karl says.

“What they really think about is access, experience and convenience – that’s really how we’ve focused on building the best possible customer proposition.”

This focus on convenience allows platforms to cater to different consumer priorities, whether they value financial predictability or the freedom to switch tech on a whim. 

Karl notes that this is especially true for a generation of users whose digital lives are decoupled from physical hardware.

“The concept of ownership in electronics is becoming less important, certainly for a modern consumer who stores their data in the cloud," he says.

"Beyond that, the device is just something that they want to have exclusive access to, but actually, ownership is not important.”

By recognising that consumers now value the utility of a device rather than the device itself, brands can stop trying to sell expensive, depreciating assets.

Instead, they can focus on delivering seamless, ongoing experiences – a win for the consumer’s wallet and a predictable revenue engine for the tech industry.

This shift also addresses a glaring sustainability crisis in consumer tech where on average, devices are used for only about 40% of their useful life before they are discarded, according to Raylo. 

By transitioning to subscription models, devices can easily be returned, refurbished and re-circulated, ensuring that hardware is fully used while keeping cutting-edge tech affordable and accessible.