Apple replaced 11M iPhone batteries under 2018 repair program, 9M more than average
At an all-hands employee meeting in January, Apple CEO Tim Cook revealed that some 11 million iPhone batteries were replaced as part of a special 2018 repair program, a figure up to 11 times what the company would have expected under normal circumstances.
According to Daring Fireball's John Gruber, Cook informed employees of the massive uptick in iPhone battery replacements -- 11 million versus an anticipated 1-2 million -- during an town hall meeting on Jan. 3.
The new information sheds light on Apple's recent revenue guidance revision for the important December quarter. In a note to investors in January, Cook said Apple is anticipating revenue to come in at $84 billion, well below a forecast of between $89 billion and $93 billion issued last November.
While a slowdown in Chinese iPhone sales took the brunt of the blame for the miss, some responsibility was assigned to a weaker than expected hardware upgrade cycle.
"While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements [emphasis added]," Cook wrote.
In light of Cook's statement at the all-hands meeting, it appears Apple underestimated the impact of the popular repair program that cut the cost of out-of-warranty battery replacements from $79 to $29. As Gruber points out, while Apple was aware of the increase in replacements over the course of 2018, said program's effect on iPhone sales likely went unrecognized until the annual upgrade cycle of fall 2018.
Apple instituted the replacement program at the end of 2017 in response to revelations that older versions of iOS artificially throttled the performance of iPhones with degraded batteries.
Operating a device with a worn battery can result in shorter running times and, as was the case with certain iPhones, random shutdowns under extreme loads. Apple quietly instituted a performance cap in iOS 10.2.1 to alleviate performance issues and keep older phones operational. Customers were not notified of the change, which led to a major kerfuffle when it was discovered that the peak performance of some iPhones would be artificially reduced under certain situations.
A series of lawsuits and probes by governmental bodies followed.
Apple apologized for what it characterized as a "miscommunication" in a letter to iPhone owners in late 2017. Directly resulting from the so-called "slowdown controversy" were a number of customer-facing initiatives including the creation of battery monitoring software and tools to disable CPU throttling implemented in current versions of iOS. The battery replacement program, which was part of Apple's response, kicked off in January 2018 and ran through December that year.
According to Daring Fireball's John Gruber, Cook informed employees of the massive uptick in iPhone battery replacements -- 11 million versus an anticipated 1-2 million -- during an town hall meeting on Jan. 3.
The new information sheds light on Apple's recent revenue guidance revision for the important December quarter. In a note to investors in January, Cook said Apple is anticipating revenue to come in at $84 billion, well below a forecast of between $89 billion and $93 billion issued last November.
While a slowdown in Chinese iPhone sales took the brunt of the blame for the miss, some responsibility was assigned to a weaker than expected hardware upgrade cycle.
"While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements [emphasis added]," Cook wrote.
In light of Cook's statement at the all-hands meeting, it appears Apple underestimated the impact of the popular repair program that cut the cost of out-of-warranty battery replacements from $79 to $29. As Gruber points out, while Apple was aware of the increase in replacements over the course of 2018, said program's effect on iPhone sales likely went unrecognized until the annual upgrade cycle of fall 2018.
Apple instituted the replacement program at the end of 2017 in response to revelations that older versions of iOS artificially throttled the performance of iPhones with degraded batteries.
Operating a device with a worn battery can result in shorter running times and, as was the case with certain iPhones, random shutdowns under extreme loads. Apple quietly instituted a performance cap in iOS 10.2.1 to alleviate performance issues and keep older phones operational. Customers were not notified of the change, which led to a major kerfuffle when it was discovered that the peak performance of some iPhones would be artificially reduced under certain situations.
A series of lawsuits and probes by governmental bodies followed.
Apple apologized for what it characterized as a "miscommunication" in a letter to iPhone owners in late 2017. Directly resulting from the so-called "slowdown controversy" were a number of customer-facing initiatives including the creation of battery monitoring software and tools to disable CPU throttling implemented in current versions of iOS. The battery replacement program, which was part of Apple's response, kicked off in January 2018 and ran through December that year.
Comments
FOR PETE Sake, there are over 200 million ~iPhone 6 / 6s+ out there, and only 5% did battery swap.
I think the battery swapping didn’t have much impact, but it will have added to the hurt. Besides, not everybody replaces batteries through an official apple shop, so probably the amount of swaps is much higher.
So for us the reduced price for the battery swap only pulled in the exchange from 2019 to 2018; it didn't push off a phone sale from 2018 to 2019. If Apple comes out with a smaller format phone in 2019, we will buy her a new iPhone even though we just replaced the battery in her SE. I don't think that all (or even most) 9 million extra battery exchanges in 2018 translate to lost new phone sales. However, if we then buy a new phone in 2019 to the casual observer it would look like we did exactly that: postponed our "2018 purchase" to 2019 because we swapped the battery at a reduced cost.
"So why would Apple want to do this? What is the logic of this durability focus as a business model? It may be good for the environment but is it good for the bottom line?
Of course, there would be not much business without an environment and we should all strive for sustainability. But this is an existential observation, and it’s defensive. The important call to make is that Apple is making a bet that sustainability is a growth business.
Fundamentally, Apple is betting on having customers not selling them products."
Troll all they want, but Apple already leads in longest lifecycle for their iPhone line.
11 million battery replacements for the program, for an iPhone series the began with the release of the iPhone 6 / 6 Plus in 2014, and includes other, newer models to a lesser extent, in a timeframe that Apple sold 800 million iPhones.
I'd be bragging about that actually, but certainly not using it as an excuse for lesser sales last quarter, which is the impression that most people came away from Tim's statement. It certainly belies the extent of the "throttling" story by magnitudes.
Longer term, will these new ‘refreshed’ phones be handed down to others? Could this be part of the overall strategy? Since every operating iOS device out there potentially earns Apple service revenue (App Store, iTunes, accessories).
Curious why an employee would leak it to John Gruber. I can’t imagine execs at Apple would want this figure out there.
As Horace said, he's offering a defensive explanation of it.
The rational explanation says they had created a BAD PR situation with the intentional throttling stories flowing out of the iOS update and needed to do something positive to counter them. Thus the battery program for which they got GOOD PR.
IMHO if only 9 million more iPhone owners took advantage of it than would typically have, and many of them did so in an earlier quarter anyway, and not all 9 million would have been upgrading to begin with, it doesn't seem to me like the program could have had much impact on current sales. What, maybe a couple million or so at most in lost sales attributable to this quarter? I'm a bit surprised after reading about the numbers Mr. Cook even raised that as a major factor, specifically mentioning it as one there at the All-Hands meeting and in public statements too. It does leave the impression of being something negative rather than a positive, just the opposite of Horace's slant on it as "Apple betting on customers rather than selling them products."