The fallout for Apple after its admission that it intentionally slows down older iPhone handsets is likely to have a significant financial impact on the company according to one analyst, who predicted that Apple’s cheap battery replacement offer may actually cut sales of new handsets by millions of units this year.
The warning comes after Apple issued a rare public apology, and pledged to reduce the price of an out-of-warranty iPhone battery replacement by $50 – from $79 to $29 – for anyone with an iPhone 6 or later.
Apple had previously charged £79 in the UK (or $79/£59 in the US) to replace batteries not covered under the phone’s warranty.
Apple had made the battery replacement offer for older iPhones to counter accusations that its iPhone slowdown was not part of a cynical attempt to force its customers to purchase newer handsets.
But this offer could have a significant financial impact on Apple in the coming months, an analyst has warned.
“Even a small percentage [of customers] opting for battery replacement over upgrade could have meaningful impact on iPhone sales,” Bloomberg cited Barclays analyst Mark Moskowitz as writing in a note on Wednesday.
Moskowitz estimates around 519 million users are eligible for the battery offer, and that in the most likely scenario 10 percent take the $29 offer, and about 30 percent of those people decide not to buy a new iPhone this year.
This means Apple could miss out on selling a whooping 16 million iPhone upgrades in 2018, the analyst said.
It should be remembered that the iPhone is Apple’s principle cash cow.
Indeed, approximately two thirds of Apple’s revenue is accounted by iPhone sales, and the company’s strong fiscal performance has previously been dented by falls in iPhone sales on multiple occasions.
And amid media reports that its new (and expensive) iPhone X model is not selling all that well, and is indeed being reportedly outsold by the iPhone 8 range, this will be causing some worry for the CFO at the Cupertino-based company.
It should be noted that Apple’s cheaper battery offer only applies for the iPhone 6 or later, and the offer is only set to last until the end of 2018.
An Apple spokeswoman has reportedly declined to comment on the matter.
Apple’s battery-gate issue first came to light just before Christmas after a iPhone user shared performance tests on Reddit that suggested that their iPhone 6S had slowed down considerably as it had aged.
However the handset suddenly sped up again after the battery was replaced.
Then John Poole, founder of benchmarking firm Primate Labs, gathered Geekbench data and analysed thousands of iPhones running different versions of the iOS operating system. He found that some of these older iPhones did indeed appear to have been deliberately slowed down.
Apple’s practice of slowing down older iPhone 6S and iPhone 7 began when the iPad maker released iOS 10.2.1 in January 2017.
Days after Apple admitted it intentionally slowed down older handsets, it was hit with multiple class-action lawsuits, after angry users alleged Apple ‘interfered’ with users’ handsets without their consent.
Apple is currently thought to be facing at least 11 lawsuits over the matter, one of which (in France), holds the potential of criminal charges.
Apple for its part says that it slows down older iPhones to prevent unexpected shutdowns, because older batteries may not be able to supply the required maximum current demanded by the phone’s processor at full speed.
However, it has not addressed user concerns over whether rival smartphone makers implement a similar policy, and if they don’t, why Apple feels it needs to do so with its handsets.
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This is a "glass half empty" way of looking at things.
The alternate view is that many more customers will now come into Apple Stores to get their inexpensive battery replacement, instead of going to a local non-Apple shop, or doing the replacement themselves.
More traffic in the Apple Stores means more customers exposed to Apple products, and more contact and interaction with Apple representatives. If anything, this will probably lead to more sales of Apple products and services than normal.