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Apple Replaced 11 Million iPhone Batteries in Its $29 Program (cnet.com)
Apple's $29 battery replacement program may have seriously dinged sales of its 2018 iPhone models. From a report: The company replaced 11 million iPhone batteries under the program, John Gruber of tech-focused blog DaringFireball reported Monday, citing Apple CEO Tim Cook at an all-hands meeting. Typically, the company replaces 1 million to 2 million batteries each year, DaringFireball noted. Cook cited the program's negative impact on Apple's revenue in a Jan. 2 sales warning to investors but didn't offer specific numbers.
What this demonstrates is how much Apple's sales are propped up by the lack of removable batteries and presence of their battery-saving, performance-crippling software.
To be fair the first few iterations of the iPhone were significant and worth the upgrade but really ever since the iPhone 6 there hasn't really been any reason to upgrade aside from the battery/performance issues, now that you can get a replacement battery and turn off the sneaky software "features" there's really no reason to spend money on the latest iPhone at all and people have realised that.
It's clear the iPhone 6-series has a hardware design defect that caused shutdowns when its CPU hit heavy loads when running on batteries with reduced capacity. The right thing to do would have been a recall, of both the logic board and a replacement battery. But considering the millions of iPhone 6's sold that recall would have likely cost billions of dollars. So instead Apple attempted to hide the issue by releasing a software update that quietly and severely throttled the CPU to avoid peak power usage. Then Apple lied about it, then Apple got sued, which is what finally lead to the year-long $29 battery replacement program. Even with lost upgrade sales from that program Apple probably still came out ahead vs the cost of a recall. That said, the damage to their reputation was severe IMO.
That number only works if it assumes all 11 million people would have bought a new $1,000 iPhone instead - $11 billion makes up for the earnings expectations nicely.
However, that only works at the most superficial of levels. There's a whole cottage industry of mall kiosks and small-time repair shops that specialize in replacing spent batteries and cracked screens. Apple managed to massively undercut them at $29 (which is why the numbers are so high). Let's say that half of those 11 million people would have done any of the following:
-Gotten a $749 XR. 5.5 milion of those meets their projected earnings, but only barely. Make it a $599 iPhone 8, and now you're off by over a billion - not "oh f'k" money, but still enough to make investors plenty nervous.
-Gotten an Android phone.
-Had a third party change the battery.
-Gotten a secondhand iPhone 7.
-Stuck it out with their existing iPhone.
That also would have put them in a position where class action lawyers were tripping over themselves to get some iBucks. If that lawsuit was as large as the tenth largest payout in history - not impossible since it would likely include virtually every iPhone in the past decade - that's $3.2 billion just in the payout. That payout would make them miss their earnings by billions even if every battery replacement would have otherwise been a $1,000 XS.
The number indicates that even the slightest scrutiny prevents Apple from making their earnings numbers. In turn, this starts to indicate that Apple can't expect to make the fortunes off the Annual iPhone crowd they once did. IoT doesn't seem to be helping them; it's rare to find a description of a HomePod as a great-sounding also-ran and there's no indication that releasing the iRing or the iHue will push them into those markets. The Apple Car is vaporware, Apple being the new cable company could go either way (especially without a first party television to generate the hype for it), Tim doesn't seem to want to revisit the server room, and while I can't entirely dismiss a surprise-success like the iPod, Tim's had nearly a decade to do that and doesn't seem to have been able to figure out the next big thing just yet.
Now, don't get me wrong - I'm not an Apple hater, and I don't think they're going to die overnight. The iOS ecosystem is incredibly strong and will continue to be Apple's cash cow for quite some time to come. However, I think that investors are starting to get nervous. Maybe it'll be a good thing, and we'll see Apple revisit their creative design loyalists. Maybe Apple will shock everyone by finding a niche and owning it. Or maybe, Apple will finally prove to itself, to Microsoft, to Google, to Facebook, and ultimately to Wall Street, that Big Tech has settled in with Big Oil and Big Pharma as being boring, stable, and iterative.