Apple reportedly replaced 10 times as many batteries as expected in 2018

Apple may have had to replace as many as 11 million iPhone batteries under its heavily discounted $29 replacement program, according to John Gruber over at Daring Fireball. According to Gruber, Apple would typically expect to perform between one and two million replacements during the same period. Apple CEO Tim Cook recently cited the program, alongside a slowdown in the Chinese economy, as one of the reasons for the the company’s slashed earnings outlook for Q1 2019.

If 11 million people replaced their iPhone’s battery for $29 rather than spending $1,000 on a new iPhone, that would roughly equate to $11 billion in lost revenue. For reference, Apple said it expected to make between $5 and $9 billion less in its revised forecast. Of course, not every customer that replaced their battery would have definitely bought a new phone, and Apple’s original earnings forecast should have accounted for the replacements, but these numbers give an idea at the scale of the consumer response.

The discounted pricing for battery replacements was offered in light of the iPhone throttling scandal, which saw Apple degrade performance of older phones to compensate for their aging batteries. After a considerable outcry when the hidden “feature” was discovered, Apple announced it would attempt to make up for its poor communication by offering cheaper replacement batteries for a year. New batteries would remove the need to throttle older devices that were at risk of crashing when under intense loads.

In the first earnings call after the reduced pricing was announced (transcribed by Six Colors), one financial analyst asked whether consumers’ increased awareness that they could replace their batteries rather than upgrade their phones should be a concern for investors. Cook said that “upgrade rates” did not factor into the decision to reduce the price of replacement batteries.

Despite the earnings impact that battery replacements may have had, it’s likely that the China slowdown and the so-called “S factor” played a bigger part. Writing in his Monday Note column, former Apple executive Jean-Louis Gassée pointed out that Apple’s revenue growth dropped from 30 percent to just two percent between the iPhone 6 and 6S release years. The more incremental changes made to the 6S device enticed far fewer people to upgrade, and the same thing is thought to have happened between the iPhone X and the XS. 

There is one silver lining to 11 million customers paying to replace their batteries. If this number is accurate, then Apple would have made around $319 million in revenue from battery replacements alone. It also means 11 million people continuing to pay for Apple services instead of switching to Android devices.

The Article was Published on : TheVerge