brucemc

No doubt Apple felt pressured by the media / customer environment at the time to bring in the battery replacement program (at lower price).  And it has gone back up, but not to what it was previously ($50 in US, $65 in Canada now - but was $99 pre replacement program).  The result is a good one IMO.  Devices can last longer (more people are in general just aware that they can easily replace battery, and the current cost is more in-line with general electronics repairs).  This is positive to overall customer satisfaction, which is Apple's most important metric.  Someone might delay an upgrade by a year or 2 (maybe longer), but then are far more likely to stay with iPhone (..."hey, I just got 5 years out of this device...good value & I am familiar with it").  Someone who has an iPhone is far more likely to buy a Mac, iPad, AW, AirPods, etc.  

9M more battery replacements in 2018 certainly had a material impact on FY19 Q1 sales.  While the program ran over the year, the case can easily be made that a replacement in calendar Q1'18 was the reason for no upgrade in Q4.  Apple might be able to model what the result really was, but it isn't hard to see a few million (maybe 2-3M at a minimum) of upgrades were lost in that last quarter for this reason.  But crucially, these are "delayed" upgrades, not lost.

Here is my view on the causes of reduction in last quarter's iPhone sales (in order):
- China (affected many companies, especially those selling higher end goods)
- Battery replacement 
- Models (specifically, the XR being a "large" phone only)
- Prices (specifically, prices outside the US, impacted both higher price points of phones & exchange rate)

Key here is that, outside of China, all of the other elements are in Apple's control.  And nothing here is indicating that the iPhone business is in a permanent decline.

designr said:

..
Apple can live in this world successfully but it hasn't shown that it's great at it in the past. If Apple wants to broaden its revenue portfolio to include the perhaps more stable and sticky services side of things, they need to make sure their installed base grows, even if slowly, and that suggests thinking about some phone options that keep more modest budgets in mind. Part of this is just purchaser psychology...at some point the phones are good enough and the premium price is less worth it.

Apple can still carve out the higher end of the market with solid design, build, quality (and OS) while still providing more affordable options to people.
...

A couple of things:
- Not sure if your comment on not being successful at this in the past is referring to the biggest example, which is the Mac business.  Apple is the only original computer vendor still in operation, and by many measures, is the most profitable manufacturer despite being 5th (ish) on shipments.  I certainly think Apple knows how to manage a mature business.
- With iPhones "lasting longer" (a 6s with a battery upgrade is quite capable), there is more of a grey market for iPhones that is effectively handling the lower priced tier.  Someone can buy a used iPhone 7 for less than $300 USD (often $250).  Again, add in a battery replacement for $50, and you have a phone that would last a casual user, who doesn't want to pay for the latest & greatest, for a number of years.  Apple themselves have trade-in programs for this, as do 100s of companies around the world (not counting private sales, or simply hand-me-downs from parents to kids).

rogifan_new said:

Let me guess...it’s going to be clunky but Samsung will get props for being first and Apple will be doomed somehow.

That is certainly what you will say.

Sculley, keep it down!  The stock needs to stay down for awhile longer, so I can purchase more, and so can Apple...

Analysts (or at least what we see as the 'public' ones) continue to demonstrate their worth.  Provide a stock price target cut AFTER the stock has already dropped well below their previous target.   In the future, when Apple stock moves quickly beyond their low target price, they will then revise it upwards.  Such usefulness!