Sale of 16M iPhones at stake
new york — Apple’s offer to replace iPhone batteries cheaply may cut sales of new handsets by millions of units this year, according to Barclays analyst Mark Moskowitz.
“Even a small percentage [of customers] opting for battery replacement over upgrade could have meaningful impact on iPhone sales,” he wrote in a note on Wednesday.
Apple recently said it intentionally slows iPhones with older batteries to prevent the handsets abruptly shutting down. The Cupertino, California-based company stressed that it hadn’t intentionally slowed the devices to encourage users to purchase newer models. In response to customer complaints, Apple apologised and cut the price of replacement batteries from $79 to $29 for many older iPhones.
While analysts agree this was a good public relations move, some are concerned it will dent future sales of iPhones, a product that accounts for roughly two-thirds of Apple’s revenue. The company’s stock rose almost 50 per cent last year, largely on hopes for a “super cycle” with the new iPhone X and 8, where a large number of users upgrade.
Moskowitz estimates around 519 million users are eligible for the battery offer, and that in the most likely scenario, 10 per cent take the $29 offer, and about 30 per cent of those people decide not to buy a new iPhone this year. This means Apple could miss out on 16 million iPhone upgrades in 2018, the analyst said.
Apple shares rose 0.6 per cent to $173.28 in early afternoon trading in New York. The stock was up as much as 1.3 per cent earlier in the day.
The battery programme will only be in effect through the end of the year, and there are also other reasons for iPhone users to upgrade.
Battery replacements
A Brazilian state agency responsible for consumer issues notified Apple on Wednesday that it must explain how Brazilian owners of iPhones will be able to buy battery replacements at lower prices.
Procon-SP, an agency in the state of Sao Paulo, Brazil’s richest and most populous, said it notified Apple that it has 10 days to provide the information.
The agency said Apple employ- ees refused to sign the notification, but Procon considered the company notified.
The agency did not say what could happen if Apple does not comply, but it has the power to fine or propose legal action against companies for causing losses to consumers.
Apple apologised on December 28 over its handling of the battery issue. — Bloomberg, Reuters