Apple’s discounted battery replacement program may have affected the company’s bottom line in the billions, according to reports.
After Apple admitted that it was slowing down aging iPhones based on older batteries, the company offered a solution: It would replace customers’ batteries throughout 2018 at a price of $29 per phone, down from $79.
The company didn’t share how many people actually took advantage of the program, but now there’s a suggested number, and it’s 11 million.
One report cites CEO Tim Cook at a Jan. 3 meeting of Apple employees, where he said the 11 million number is almost 10 times higher than the standard number of replacements for batteries, which is between one and two million.
Jean-Louis Gassée, a former Apple executive, hypothesized that each replacement of a battery might have cost Apple $1,000 in new phone revenue, which comes to about $11 billion for the year.
Granted, that’s a high number, especially since most iPhones are selling for around $793, and there’s also no way to know if replacing the battery actually stopped someone from getting a new phone, or how many people it influenced. However, it’s clear that it had an impact, and that more people than expected used the program.
Also, Apple revised holiday sales projections from between $89 to $93 billion to $84 billion, and the company usually gets to or past the higher number, which suggests the shortfall could have been almost $10 billion.
That doesn’t mean batteries were the only culprit. Cook specifically mentioned the slowing Chinese economy as a major factor in a letter to investors.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad,” Cook said. “China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed.”