Apple’s $29 replacement batteries expected to hurt new iPhone sales

“There’s a very good business reason as to why Apple priced iPhone battery replacements at $79, and it isn’t profit,” Matthew Humphries writes for PC Magazine. “By making a battery replacement relatively expensive, more existing iPhone owners with failing batteries are likely to decide to upgrade to a newer model instead, which is even more profitable for Apple. However, that situation is expected to change this year.”

“Analysts at Barclays are expecting iPhone sales to drop during 2018 thanks to Apple’s cheap battery replacement program which is already available,” Humphries writes. “The iPhone 6, 6 Plus, 6s, 6s Plus, 7, 7 Plus, and iPhone SE all qualify for the $29 battery replacement.”

“Those models currently make up 77 percent of the iPhone market,” Humphries writes, “meaning even a small percentage of owners opting for a new battery instead of a new iPhone will result in a significant fall in iPhone sales.”

Read more in the full article here.

MacDailyNews Take: As we wrote yesterday:

If iPhone sales are negatively impacted, you can see why some think that Apple wanted to keep what they were doing a secret. If people knew that a $79 battery replacement would give them an iPhone that performed like it did on day one, a meaningful percentage would take that option versus buying a new iPhone. Now that it’s just $29 this year, that percentage will naturally increase.

Then again, as Hanlon’s razor states: “Never attribute to malice that which is adequately explained by stupidity.”

Apple’s made up of people. People are imperfect. We’ll take Apple’s word for it that they “always wanted… customers to be able to use their iPhones as long as possible” and that they “have never — and would never — do anything to intentionally shorten the life of any Apple product, or degrade the user experience to drive customer upgrades.”

SEE ALSO:
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An Apple conspiracy theory blooms – January 2, 2018
Apple clarifies policy on $29 battery replacements: All iPhone 6 and later devices are eligible – January 2, 2018
Why Apple’s response to iPhone ‘batterygate’ is brilliant – December 30, 2017
Australian lawyers to launch largest-ever class action against Apple over iPhone ‘batterygate’ – December 29, 2017
The most annoying things about Apple’s iPhone ‘batterygate’ apology – December 29, 2017
iFixit discounts iPhone battery replacement kits as Apple cuts prices, apologizes for the confusion – December 29, 2017
15 class action lawsuits filed against Apple for throttling iPhones with aging batteries – December 29, 2017
Apple apologizes for poor communication about iPhone batteries and performance; slashes battery replacement cost from $79 to $29 – December 28, 2017
No, Apple’s throttling of iPhones with aging batteries is not planned obsolescence – December 28, 2017
Apple execs face jail in France after lawsuit over slowing down iPhones – December 28, 2017
Korea seeks explanation from Apple for slowing down devices without warning – December 28, 2017
Apple now facing 8 lawsuits over throttling processors in iPhones with aging batteries – December 27, 2017
Apple tarnished their brand with clandestine iPhone battery management and processor throttling – December 27, 2017
Should Apple replace aging iPhone batteries for free instead of throttling processor speed? – December 21, 2017
Apple confirms iPhones with older batteries will take hits in performance – December 20, 2017
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Apple met with Chinese regulators to discuss iPhone 6s unexpected shutdowns – February 10, 2017
Rumor: Apple may extend iPhone 6s battery replacement program to iPhone 6 – January 17, 2017
A message from Apple about 
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Apple offers free battery replacement for ‘very small number’ of iPhone 6s units with unexpected shutdown issue – November 21, 2016

25 Comments

  1. The customer’s cost of replacing a battery is more than the price. There’s time and inconvenience. So for some people, lowering the price will not be a sufficient incentive to replace the battery.

    The outcome of reducing the price is more than providing some people incentive to upgrade later. If some customers like the deal or even hear that there’s a good deal on a replacement battery, that contributes to customer retention above what it would be otherwise.

    1. The lack of business knowledge on MDN never ceases to amaze me.

      Mark Moskowitz (Barclay’s) speculates that if 10% of eligible iPhone installed base takes advantage of the $29 battery program, Apple will lose 16 Million new iPhone sales this year.

      I believe that if you draw 52 million battery eligible iPhone owners into an Apple Store, that otherwise wouldn’t have considered upgrading to a new iPhone, that in addition to 16 million that don’t buy a new iPhone, you’ll get 16 million that change their minds and do buy a new iPhone.

      The iPhone 6S is 2 years old (oldest eligible is iPhone 6). Seeing the performance upgrade of an iPhone 8 is amazing. Seeing the iPhone X is a game changer.

    2. FWIW, I have a 6 and 6S at Apple at the moment. The nearest Apple Store is 60 (shitty) miles from me. I opted for pickup for both. Shipping costs were ~$7 each and I had to pay state tax. This was still a way less expensive option for me. I had the shipping boxes the day after initiating the process and Apple got the phones in a day and is working on them ( I was able to prep the phones and the FedEx guy returned to pick up the phones an hour after he dropped off the boxes). Turnaround time should be less than 4 days. This dosn’t matter to me since I already bought an iPhone X.

      Yeah, it’s a killer deal but I’m still leery of the projected 12 million fewer sales as a result of the replacement program. I guess we’ll see the numbers later.

  2. Continue to innovate and make people want to upgrade because the new iPhone (at least every three years) is so much better. Problem solved.

    I tend to keep my iPhones flawless and will have no reason to upgrade from this brand new iPhone 8 Plus I’m using right now. Yet I’ll gladly do it, in less than a year, if the iPhone X Plus blows me away.

      1. Nah. The screen is too narrow. It’s basically just a longer version of the regular iPhone.

        That’s why I want the iPhone X Plus, which should have the same width as a Plus sized iPhone.

    1. Triple whammy:
      – lost consumer trust
      – $50 less revenue per battery replacement through 2018 (peaking in Nov/Dec)
      – lost unit sales through 2018… and income on new unit sales the last few years now go toward covering the reduced cost of battery replacements, and the inevitable lawsuits that’ll have to be paid out.

      1. No $50 lost revenue, as battery replacements were near-zero before now. That was the whole point of the decision — by 2 yrs, when your battery life is suffering, the phone company will sell you the new model at only slight more down than cost of a replacement battery. Customers by and large opted to buy the new phone rather than repair theirs because — wait for it — theirs was also feeling slow.

        By hiding the fact that the slowness & the reduced battery life would BOTH be solved with the repair, Apple was extraordinarily successful at duping customers into buying new instead of repairing.

        And through buyback program, Apple put new batteries in the 2-yr-old phones and sold them AGAIN.

    1. Me too, but… I’ve purchased every new flagship iPhone on launch day.

      I think there of those of us who upgrade yearly, or bi-yearly and those that buy an iPhone and use it until it just doesn’t work or work well anymore.

      I’m just guessing here, but it seems like about 50% of people fall into that latter category, but of them half are due to things like broken displays, and other issues besides battery/performance.

      Apple’s primary driver for new iPhone purchased though is clearly new features and better design.

  3. MDN: On one hand you understand sales decreasing now that people know that replacing the battery restores performance. Even if it’s perceived performance. On the other hand, you ‘trust’ imperfect people at Apple (or anywhere for that matter).

    That’s not logic, that’s faith.

  4. It appears to me that Apple’s iPhone battery problem is causing more furor on the internet than Samsung’s Galaxy S7 exploding battery problem and yet not one person has been physically harmed or suffered property losses in any way. Why so much hate against Apple as opposed to Samsung?

    It doesn’t seem as though Samsung’s S7 battery problem drastically hurt Samsung’s smartphone business. Why should Apple’s battery problem harm Apple’s iPhone business so much? It’s just odd people are so biased against Apple while this battery replacement incident would be fairly much a non-issue for any other company. Honestly, an inexpensive battery replacement seems like a great deal for a device that’s likely out of warranty.

    1. Maybe, just maybe, with Samsung it was not a surprise given their history of business practices, piss poor product quality in all products (appliances!) and jailed CEO’s etc.
      With Apple it was so unexpected we are in disbelief. Faithful users felt violated. Something like that
      Or perhaps, also recall that according to many people mad a Apple over this (media included), they think it was malicious intent to spur upgrades.
      With Samsung it was perceived more as stupidity/incompetence vs. malicious intent to blow people up with their phones.
      Ya know… don’t attribute to malice that which can be explained by stupidity (not an exact quote).

  5. Well, my wife’s 6 plus has been performing like crap since she installed iOS11 by “accident”. Not sure what version of 10.x she had before that. Specifically the Facebook app seems to wreak havoc on performance, in ways that I didn’t think any app could (literally locking up the phone for several seconds when locked or just in background).
    I have no idea if its the battery / throttling, or something else but I need to find out. I think I tried wipe and restore.
    If I find that it is the battery, hello battery program and goodbye iPhone 8+ I was thinking of getting her (she doesn’t care for the X with the narrower screen).
    So there’s one lost sale.

  6. There seems to be an assumption that iPhones only get slow when the battery is wearing out. How many have been overloaded with photos, music, etc and the owner need to either clean up a bit, or get a new iPhone with more memory.

    In terms of battery problems, I think it is common knowledge that you can go to smart phone repair shops for a new battery that is cheaper than the old Apple price AND is far easier to get to. I’ve used a Phone Doctor a few times (before a tornado knocked out their store). A cracked screen was the same price as Apple’s and the battery replacement was cheaper,

    Now the low price from Apple is going to hurt these small businesses – that is the damage the new policy will cause. I’ll pay an extra $5 to $10 to avoid fighting traffic to the mall.

    1. Small repair businesses sell service/convenience over being the low cost provider. As such I think it likely that they may lower prices but not to the extent to match Apple.

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