Apple’s decision to cut the cost of their iPhone battery replacement program to $29 could end up costing the company billions, according to Barclays.
Apple announced last week that it would be reducing the price of battery replacements on out-of-warranty smartphones from £79 to £25.
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According to a post published on the official Apple website, anyone with a iPhone 6 or later who feels that their battery is impacting their handset’s performance qualified for the deal.
iPhone users have the entire of 2018 to take Apple up on their offer. Apple will soon roll out a new feature that provides an insight into the health of their devices, indicating whether a battery replacement is recommended.
According to CNBC, approximately 77 percent of iPhone users will be eligible for the discounted iPhone battery replacement program.
Apple’s offer will help to restore the relationship between the tech company and the hundreds of millions of users that use and trust their products.
But at what cost?
According to Barclays’ analyst Mark Moskowitz, this decision could prove to be a costly one for Apple in 2018:
“In our base case scenario, 10 percent of those 519m users take the $29 offer, and around 30 percent of them decide not to buy a new iPhone this year. This means around 16m iPhone sales could be at risk.”
Given that the price of a new iPhone 8 model starts at £799 in the UK, 16m lost sales could cost Apple £11.2bn in potential revenue. 16m missed iPhone 8 Plus and iPhone X sales would cost £12.8bn and £16bn respectively.
Of course, this is purely speculation. Barclays have no real way of determining how many people will take up the offer or how many people will purchase a new iPhone over the next 12 months.
Yet, regardless of how much they actually lose, Apple are taking a huge gamble, risking up to $16bn, what equates to 9.5 percent of their total revenue for 2017 ($229.2bn), on what is effectively a huge PR stunt.
Why did Apple reduce the price of their iPhone battery replacement program?
Apple made the decision to reduce the cost of its iPhone battery replacement program after it emerged that they had been throttling performance on ageing iPhone handsets.
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According to the company, they programmed devices to slow down in order to retain the battery’s life, extend the lifespan of their products and stop devices from shutting down unexpectedly. However, many consumer groups believe this to be an attempt by Apple to force customers to upgrade to newer models.
Lawsuits have since been launched across the United States in California, New York and Illinois, as well as France and Israel. South Korea’s Communications Commission is also considering taking action against the tech giants.
Apple’s statement on the matter reads:
“We have never – and would never – do anything to intentionally shorten the life of any Apple product.
“To address our customers’ concerns, to recognise their loyalty and to regain the trust of anyone who may have doubted Apple’s intentions, we’ve decided to take the following steps.”
These steps are to reduce the cost of replacing batteries, releasing software to keep track of your device’s health and continue to improve user experience.
Apple will offer battery replacements to those with an iPhone 6 or above at the reduced price. Just visit an Apple Store or authorised Apple service centre. Alternatively, you can send your phone off for repair.
Visit Apple’s support page to schedule an appointment or collection.