For Steve Jobs, AppleCare in 1997 symbolised Apple’s commitment to stand by its products — a mark of quality that reinforced the brand's premium positioning for as long as the customer owned the device.

But when Tim Cook took over as CEO, he recognised that symbolism alone would not sustain revenue in a market where hardware would eventually reach saturation. That is when Cook, an operations and supply chain management visionary, launched AppleCare+ in 2011. This was the first offering from a consumer electronics company that charged more for enhanced coverage.

This chapter was a pivotal addition to Apple’s playbook, as it entailed building an ecosystem that customers crave — but are compelled to pay for repeatedly. This week, that chapter got stronger with the introduction of AppleCare One.

What is AppleCare One?

Apple has introduced AppleCare One, a new bundled protection plan that allows customers to cover multiple Apple devices under a single subscription. Launched on Wednesday and currently available only in the U.S., the plan starts at $19.99 per month and includes coverage for up to three devices. Additional products can be added for $5.99 per month each. Customers can sign up directly through their iPhone, iPad or Mac, or by visiting an Apple Store.

Built on the foundation of AppleCare+, AppleCare One offers expanded benefits with a focus on simplicity and value. It includes unlimited accidental damage repairs, 24/7 priority access to Apple experts, Apple-certified service, battery coverage, and now extends theft and loss protection to iPads and Apple Watches in addition to iPhones.

“Built on the trusted foundation of AppleCare+, AppleCare One extends that same reliability and makes it easier than ever to protect the products you love and depend on — like iPhone, iPad, and Apple Watch — combining simplicity and exceptional value,” said Bob Borchers, Apple’s VP of Worldwide Product Marketing, in a statement.

The pricing remains consistent regardless of the combination of devices, allowing users to save up to $11 per month compared to individual AppleCare+ plans.

With AppleCare One, customers can now enrol devices they already own, up to four years old, provided they're in good condition. This gives customers added flexibility to safeguard their devices, extending the option to buy AppleCare+ beyond the existing 60-day timeframe.

Why is Apple betting on services?

The recent AppleCare One announcement is part of Apple’s broader push to capitalise on its fast-growing services segment. In the March quarter alone this calendar year, the company reported a record $26.6 billion in services revenue, its highest-ever, contributing 28% to total sales. Since the pandemic, Apple’s services revenue has grown incrementally, with last calendar year seeing a strong 13% year-on-year increase, consistently accounting for at least a fourth of Apple’s total revenue since last year. The only exception was the December quarter, when a sharp drop in overall sales led to a 4% dip in the services share.

“Turning to services, we set an all-time revenue record of $26.3 billion for the December quarter, growing 14% from a year ago. We set all-time records in the Americas, Europe, and rest of Asia Pacific, and a December quarter record in Japan,” said Cook during the December earnings call.

According to Apple’s 10-K SEC filing, the services segment spans over 5 sub-categories. This includes Advertising, that is third-party licensing and Apple’s own advertising platforms; AppleCare, which offers paid support and service plans that provide technical assistance, global repair access, and coverage for accidental damage or theft, varying by region and product; iCloud that enables content storage and syncing across Apple devices and Windows PCs; its digital content basket that covers platforms like the App Store and subscription services such as Apple Music, Apple TV+, Apple Arcade, Apple News+, and Apple Fitness+; and Payment Services including Apple Pay, a digital payment solution, and Apple Card, a co-branded credit card.

“Apple’s services segment has evolved into a key growth driver, underpinned by the company’s extensive installed base, tight ecosystem integration, and a strategic shift in hardware economics. This pivot toward services has provided Apple with a resilient revenue stream, enabling it to mitigate cyclical hardware fluctuations while delivering higher margins and recurring income,” Prabhu Ram, VP - Industry Research Group (IRG), CyberMedia Research (CMR), tells Fortune India.

In December, Apple revealed that it has over a billion paid subscriptions across the services platform.

“Apple is all about ecosystem. Users start from iPhone then purchase other devices and with every device it’s the dilemma of purchasing Apple Care+. The company is constantly finding new ways to expand its service reach and monetise from the existing installed base,” Tarun Pathak, research director, Counterpoint Research tells Fortune India.

Aside from consistent cashflow and recurring revenue, services offer much better margins, aiding profitability.

In December, the company revealed that the product gross margin came in at 39.3%, a sequential increase of 300 basis points, driven by both improved mix and operational leverage. Services gross margin, in contrast, reached 75%, up 100 basis points quarter-on-quarter, also benefiting from a favourable mix.

“On the services gross margin, I think maybe stepping back a second, you know, services business in general is -- in aggregate, is accretive to the overall company margin. And one of the things is an important reminder is we've got a very broad services portfolio. And those businesses have very different margin profiles,” said Kevan Parekh -- Senior Vice President, Chief Financial Officer, Apple, responding to a question during the December earnings call.

Why Apple cares about AppleCare?

According to estimates by research intelligence firm Trefis, Apple’s services revenue is poised for significant growth between 2024-28. In this effort of growing the pie, AppleCare and other services will play a critical role. The data estimates that this offering is set to jump from $12.5 billion to $20 billion during this period. AppleCare’s contribution to the services segment is set to increase by nearly 1% by 2028, according to this data.

The introduction of AppleCare One further strengthens consumer confidence by offering comprehensive protection against accidental damage and defects, making customers more inclined to purchase or upgrade their devices. It also boosts the perceived trade-in value of products, encouraging more frequent hardware upgrades and supporting overall device sales.

“Apple with its Apple Care One has streamlined this. By allowing users to add devices up to four years old, it directly eliminates the stress of 60-day purchase window. This significantly expands the eligible user base. Apple is also making it easier to upgrade devices and manage the ecosystem of products under single subscription, thus improving convenience and stickiness. Apple Care One will help it increase its customer lifetime value and acquire newer customers for its growing services segment as hardware growth becomes limited,” adds Pathak.

With bundling, while individual users will feel they are paying less, for Apple it would mean only more revenues as more bundles are added. Ram agrees and says that the latest offering is poised to become a durable, high-margin lever within this services-led trajectory.

“By consolidating multi-device coverage into a single subscription, Apple is well-positioned to drive higher revenue per user and deepen customer lock-in. The inclusion of extended support for older devices, along with theft and loss protection, enhances its value proposition and broadens its addressable base,” he added.

Commenting on the announcement, Apple journalist Mark Gurman wrote in a post on X, “these plans are a pure gold mine for Apple. The vast majority of people will pay $240 a year for the next several years and never use it. That’s why insurance is a great business.”