Apple says it's been losing money on its repair programs

Posted:
in General Discussion edited July 22
During a US congressional probe, Apple on Wednesday revealed that the costs to operate its various repair programs have exceeded the revenues generated by those services for roughly a decade now, and went on to defended how it may refuse to service devices in certain situations.



Starting in July this year, Apple, along with other technology firms including Google, Facebook, and Amazon, responded to an US House of Representatives Judiciary Committee probe into anti-competitive practices. Apple's written answers have now been released, and include specific details about the company's repair policies.

The Committee asked for information dating from 2009 to the present day, including how many repair technicians Apple employs, and the "total revenue that Apple derived from repair services.

"There are tens of thousands of Apple-authorized repair technicians working at Apple Retail Stores and third-party retailers," replied Apple in the testimony.

"For each year since 2009," it continued, "the costs of providing repair services has exceeded the revenue generated by repairs."

The Committee's prepared questions then required Apple to account for what repairs its network of Apple Authorized Service Providers (AASPs) was allowed to make -- and what work, if any, it refuses to allow these firms to do.

"AASPs are permitted to conduct exactly the same repairs (both type of repair and type of product) that Apple's Retail Store staff are permitted to conduct," replied Apple.

"For more complicated repairs that cannot be handled at stores (at Genius Bars and at AASP store locations), both Apple Retail Store and AASP technicians can mail the units for repair to the nearest Apple Repair Center," it continued.

The Committee's questioning then asked about the situation where a customer gets an unauthorized repair and Apple later refuses to service the machine.

"Apple would not refuse repair services to that customer in the future," insisted the company. "For example, Apple does not automatically reject service for a device that show attempts by third parties to perform repairs."

"Similarly, the presence of non-Apple genuine components that are designed to mimic the function of Apple genuine components," Apple continued, "even if those components infringe on Apple's intellectual property, does not automatically make the device ineligible for service by Apple."

Apple's responses did, however, specify that there are situations where it would refuse to repair a customer's device.
Devices in which certain original components, such as the main logic board and enclosure, have been replaced with non-original components. This is due to the fact that to replace these components the device has to be disassembled to a point that special tooling and processes are required to reassemble the device. Attempting to reassemble devices disassembled to this state without using proper Apple tools and processes may result in the issue the customer has reported.

- When a device has been disassembled to a point that special tooling and processes are required to reassemble the device.

-When an Apple genuine component is replaced with a counterfeit component designed to look like an Apple genuine component, but not designed to function (e.g., fake speaker or camera modules).

-When a device is beyond economic repair such that repairing the device would result in greater cost to the customer than replacing the device.

-Devices that are missing components.

-Devices with intentional tampering designed to defraud Apple.

As well as performing repairs, companies require the ability to buy genuine Apple replacement parts and the Committee asked when Apple refuses to sell to them.

Apple said that it had an Independent Repair Provider program which companies apply to join. The only eligibility criteria that Apple revealed in its answers was that it requires the company to have "at least one trained technician" to do the repairs.

It also will only sell parts to businesses, including sole traders, not to individuals such as consumers. It does so as part of its "Apple Genuine Parts Repair" program, which does place some restrictions on what can be performed in a repair, but fewer than those imposed on stores deemed an Apple Authorised Service Center.

"Repairs performed by individuals, who are more likely to be untrained technicians, increases the likelihood that repairs will not follow proper safety and repair procedures and could result in improper function, product quality issues or safety events," concluded Apple, echoing comments made in April over consumer safety in its fight over the "Right to Repair."

Apple says some repair work requires precision tools and processes. (Photo of 16-inch MacBook Pro components: iFixit)
Apple says some repair work requires precision tools and processes. (Photo of 16-inch MacBook Pro components: iFixit)


While the Committee was specifically investigating whether companies use anti-competitive measures in repairs, and other areas, Apple has regularly been criticized for how hard it is to service its devices. CBC made some questionable comments on serviceability and repair, but it's also correct that the new 16-inch MacBook Pro is is difficult to repair..

Apple's full answers, including details of its work with Apple Maps, can be read on the US House of Representatives Judiciary Committee's official site.

Read on AppleInsider
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Comments

  • Reply 1 of 41
    SoliSoli Posts: 10,032member
    I know this will be a sore topic for certain people and I hope my comment doesn't derail this thread, but there are very few moving or easily breakable parts on the Mac notebook so being impossible for anyone—even Apple—to replace a keyboard without disassembling the entire machine and having to replace the top cover has always seemed like a bad move for their bottom line from the standpoint of repairs.
    razorpitMplsP
  • Reply 2 of 41
    rain22rain22 Posts: 132member
    Well if that doesn’t scream failed design... Funny that it coincides with 10 years of ‘ZERO’ from ifixit.
    razorpitdavgregmuthuk_vanalingamacheron2018
  • Reply 3 of 41
    maestro64maestro64 Posts: 5,022member
    I can tell you what apple wrote is similar to my experience with them on very few repairs I dealt with. I took in my daughter phone to get the battery replaced after she had it replaced with a non apple battery. We attempted to get the $29 replacement deal they were offering, they did their test said it did not have an apple battery so it was not eligible for the $29 replacement, but they would be happy to replace it for the full cost since the Phone was long out of warranty and it was not a Apple Battery.

    The biggest complaints I hear from people are mostly related to people who some how abused the phone (when challenged on this fact, they deny or say the phone should be able to take it). People think they can do want every them want to their expensive electronics and when it breaks the manufacturer should fix it at no cost to them. I know in the past Apple's policy was very liberal on repairs and people took advantage of this and Apple cracked down and now people are pissed.
    mac_dogjibstompywatto_cobrajony0
  • Reply 4 of 41
    SoliSoli Posts: 10,032member
    rain22 said:
    Well if that doesn’t scream failed design... Funny that it coincides with 10 years of ‘ZERO’ from ifixit.
    1) How does that scream failed design?

    2) What do you mean by "zero" from iFixit? If you are referring to their user-repairability score, they don't give out too many 0/10 scores.
    watto_cobra
  • Reply 5 of 41
    gatorguygatorguy Posts: 23,302member
    The only way I can see Apple "losing" money on their repair program is by including products under the original one-year guarantee. AppleCare is obviously a profit center, just as nearly all extended warranty programs are.  If it wasn't they wouldn't be pushing them. Why willingly repair at a loss unless required by the original one-year free warranty that came with the device purchase. AppleCare is meant to profit, just as I believe out-of-warranty repairs are. 
    edited November 2019 muthuk_vanalingamdysamoriacrowley
  • Reply 6 of 41
    More like failed quality control. When Steve Jobs was running Apple their products were either better designed for easier access by the consumer or simply built better. My PowerBook G4 is still running with no issues meanwhile the 2 MacBook Pro’s that replaced it cannot touch it’s quality and have had many trips to Apple’s Repair Center. 
    davgregmuthuk_vanalingamchemengin1
  • Reply 7 of 41
    Lose money on the repairs in order to keep customers happy, obviously. But the overall business is quite profitable.
    marklarkn2itivguynetroxwatto_cobra
  • Reply 8 of 41
    gatorguy said:
    The only way I can see Apple "losing" money on their repair program is by including products under the original one-year guarantee. AppleCare is obviously a profit center, just as nearly all extended warranty programs are.  If it wasn't they wouldn't be pushing them. Why willingly repair at a loss unless required by the original one-year free warranty that came with the device purchase. AppleCare is meant to profit. 
    They are not talking about Apple Care or 'just' Apple Care. But I think you know that and are just trying to be argumentative. 
    teejay2012tmaywatto_cobra
  • Reply 9 of 41

    maestro64 said:
    I can tell you what apple wrote is similar to my experience with them on very few repairs I dealt with. I took in my daughter phone to get the battery replaced after she had it replaced with a non apple battery. We attempted to get the $29 replacement deal they were offering, they did their test said it did not have an apple battery so it was not eligible for the $29 replacement, but they would be happy to replace it for the full cost since the Phone was long out of warranty and it was not a Apple Battery.

    The biggest complaints I hear from people are mostly related to people who some how abused the phone (when challenged on this fact, they deny or say the phone should be able to take it). People think they can do want every them want to their expensive electronics and when it breaks the manufacturer should fix it at no cost to them. I know in the past Apple's policy was very liberal on repairs and people took advantage of this and Apple cracked down and now people are pissed.
    I think there is a lot of smoke here but little fire. And having some experience with this exact issue, people seem to feel if they buy a product no matter what they do, someone should make it work perfectly again and most likely this should not cost them any money. Non Apple Batteries are probably the most dangerous single element you can put in a phone. I mean a non apple logic board is pretty silly too since it may well come with some extra features that could invade your privacy on a level you might not expect. I think some of this can be made more clear by thinking about your car. Let's say you take your 7 year old Honda to a private garage. And they replace belts and electronics and maybe an alternator. And when the car stops working you take it to Honda demanding they fix what's wrong AND you shouldn't have to pay for it.And they say well, none of these parts are right and by the way, you also damaged your fuel injector ETC, ETC and we could fix it all but it'll be 5 grand. And at that point, maybe making 5 grand worth of payments on a new car is money better spent. Or not. But I'll guarantee you Honda is not paying for the repairs, the new parts or their mechanics time. So then you take it back to the private hand garage and tell them what you learned, that the parts are not right for this car and the parts have damaged other parts of your car. What will the private mechanic say? And isn't it HIS issue, not Honda's? Maybe don't use this mechanic again.
    aderutterstompyFileMakerFellerwatto_cobra
  • Reply 10 of 41
    AppleCare is not a profit center when it comes to my kids. They have broken maybe a dozen screens over the last 10 years. At least. One even went through the wash, I admitted it, and they replaced it for free because the water detectors were still intact.
    edited November 2019 watto_cobra
  • Reply 11 of 41
    gatorguygatorguy Posts: 23,302member
    gatorguy said:
    The only way I can see Apple "losing" money on their repair program is by including products under the original one-year guarantee. AppleCare is obviously a profit center, just as nearly all extended warranty programs are.  If it wasn't they wouldn't be pushing them. Why willingly repair at a loss unless required by the original one-year free warranty that came with the device purchase. AppleCare is meant to profit. 
    They are not talking about Apple Care or 'just' Apple Care. But I think you know that and are just trying to be argumentative. 
    Absolutely not. I think the investigative committee might have been asking about Apple Care along with outside of warranty repairs primarily rather than the overall costs involved in a free warranty. Apple would presume to claim that there is no economic incentive to make it hard for 3rd party repair centers to repair Apple products, which is not true. Apple Care would be a profit center, and based on past discussion about it a relatively lucrative one. Fewer people would purchase it if independent techs were able to easily perform repairs as needed, and outside of warranty at a lower cost than going direct to Apple. 
    edited November 2019 muthuk_vanalingam
  • Reply 12 of 41
    cpsrocpsro Posts: 2,932member
    Was revenue from AppleCare+ subscriptions included in the profitability calculation?
  • Reply 13 of 41
    Hmmm, what a crack....how did that Chinese guy able to returned fake iPhones and took them a  while to catch him.... Simone’s sleeping on watch
    watto_cobra
  • Reply 14 of 41
    avon b7avon b7 Posts: 5,959member
    They may lose money on the repair service but they make it up with the price of the original sale. I wonder what the statistics look like for 'repair'/replacement of healthy parts that required swapping out because of the faulty part and machine design itself when compared to more modular designs.
    dysamoria
  • Reply 15 of 41
    HyperealityHypereality Posts: 58unconfirmed, member
    I left an iPad Pro (512Gb) 12.9" in the sun. It was my mistake. The screen was permanently discoloured, but it still worked perfectly well.  
    Apple 'repaired' it for a payment of around £40. 
    The repair consisted of giving me a brand new £1200 iPad Pro.  
    This repair was in the first 12 months and did not require purchasing AppleCare+

    Note that Apple replaced the iPad Pro because it was unrepairable, the old iPad will be recycled.  So they essentially absorbed the whole manufacturing cost because I made a silly mistake. 

    The problem with the government set on interfering in Apple's business is that they might just ruin this brilliant deal for the rest of us. 
     
    thtentropysn2itivguystompyfastasleeproundaboutnowwatto_cobra
  • Reply 16 of 41
    I wonder how many of these “failed repair” experiences are from previous android users. I have always used Apple products and am very familiar with their repair practices & guidelines. I never abuse my products. If one has an android product that is broken, they can take it to their local carrier store and get a replacement easily, or have it repaired easily. They expect the same from Apple. (This is just a guess.)
    watto_cobra
  • Reply 17 of 41
    I began my four decade career in electrical engineering as a QA/QC engineer for a large company making building automation/safety systems. Reliability was tantamount. While analyzing field failure reports, I discovered, unsurprisingly, that connectors were the highest failure rate items. The military reliability handbook (MIL-217) warned of this, so it was not a surprise. The fascinating aspect of the field failure data I received was that, although connectors of almost any kind truly were more prone to failure than most other things, socketed parts of systems (chips in particular) were themselves "failing" at above expected rates. Deeper analysis revealed that, because socketed things are easy/cheap to replace, they would be routinely replaced, and because the replacement wasn't done under controlled factory conditions, connection reliability decreased.

    There is ample historical data to support designing systems to have as few mechanical connections as possible, and that's precisely what Apple does. While repair of such systems may be more difficult, the reduction in overall failure rate more than makes up for it. The truth of this is reflected in Apple's consistently high user satisfaction scores.

    The manufacturing companies I worked for during my career would never have attempted to turn service/repair into a profit center. That damages the incentive to design well in the first place and is ultimately detrimental to the organization. The reason service/repair is more expensive than the original manufacturing is simply a matter of scale. Repair centers do not move thousands of components/assemblies per day, do not possess purpose built mass manufacturing equipment, and do not have factory labor rate people available to make the repairs.

    I find Apple's claim credible. Public ignorance of how mass scale manufacturing works doesn't make the reality of it go away.
    n2itivguydysamoriastompygeekmeebeeble42MplsPacheron2018sailorpauljdb8167roundaboutnow
  • Reply 18 of 41
    sflocalsflocal Posts: 5,823member
    rain22 said:
    Well if that doesn’t scream failed design... Funny that it coincides with 10 years of ‘ZERO’ from ifixit.
    What a load of crap.

    Apple's hardware is more reliable than ever.  Nothing is 100% perfect flawless so stop making it sound like it's something it's not.

    99% of people will NEVER open up their iDevices after purchase.  FACT.  We can debate the merit of soldering certain components until the stars burn out.  From an engineering perspective, it makes perfect sense to design a product for that 99% of the consumer market and remove unneeded components (like socket connectors, screws, etc..).  It saves on production costs, and arguably makes for a better, more reliable product instead of introducing potential problems to please that < 1% of users.


    beeble42watto_cobra
  • Reply 19 of 41
    sandorsandor Posts: 591member
    More like failed quality control. When Steve Jobs was running Apple their products were either better designed for easier access by the consumer or simply built better. My PowerBook G4 is still running with no issues meanwhile the 2 MacBook Pro’s that replaced it cannot touch it’s quality and have had many trips to Apple’s Repair Center. 

    We've seen the opposite at work - the last of the PowerPCs were some of the most difficult machines to keep running.
    Quad nostril/wind tunnel PowerMacs with constant thermal issues, most needing utilities to over ride SMC fan control to increase the speed & decrease component failure.

    watto_cobra
  • Reply 20 of 41
    sandorsandor Posts: 591member
    With regard to Apple repairs, i just had an experience with the glue failing on a set of PowerBeats3.

    Apple refused to honor the $99 repair, said they were un-repairable & would cost $199 to get a refurbished pair.

    Joe's Gaming & Electronics repair fixed them for $35, and i have been using them daily since August with no issues.

    Apple is fully supporting a throw-away culture with their products.
    dysamoriamuthuk_vanalingamzoetmb
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