Just after the new year had been ushered in, Apple issued an investor warning stating it wouldn’t hit its expected revenue target. The blame was placed on worsening economic conditions in China, the current US trade war, and Apple’s $29 battery replacement program. Now it seems that cheap battery offer played a bigger role than anyone thought.
John Gruber from Daring Fireball has revealed that during Tim Cook’s all-hands meeting earlier this month it was stated 11 million iPhone owners used the $29 battery replacement offer. Normally, battery replacements would total no more than 1-2 million, but the greatly reduced price resulted in up to a 10-fold increase in demand.
As The Verge rightly points out, if 11 million people decided on a battery upgrade instead of spending $1,000 on the latest iPhone models, that’s a shortfall in revenue of $11 billion. Remember, Apple’s revised revenue forecast was up to $9 billion lower, suggesting most of it could have actually been caused by these cheap battery upgrades.
Gruber also suggests that even though the battery replacement program ran all year, Apple wouldn’t have felt its impact until after the iPhone XS models and iPhone XR launched. It was only then that consumers with new batteries decided not to buy a new iPhone, so the effect couldn’t have been accounted for in initial forecasts.
Although the earnings downgrade happened through a mix of factors, I think everyone, including Apple, failed to predict the impact cheap new batteries would have. One thing I think we can predict with some certainty now, though, is that Apple will do everything it can to avoid ever having to offer cheap battery replacements again.
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