Apple may have shot itself in the foot with its $29 iPhone battery replacement program as 10 million more users than anticipated opted to swap out their old batteries rather than pony up for a new phone.
The Cupertino, Calif.-based company has replaced 11 million batteries under the program, according to Daring Fireball’s John Gruber, citing a leak of Apple CEO Tim Cook’s comments during an all-hands meeting earlier in January as Cook was preparing his now infamous earnings warning.
In a normal year, Apple replaces between 1 and 2 million iPhone batteries, Cook reportedly said.
The little-noticed mention Cook made two weeks ago — in the midst of the tsunami of China’s slowing sales — stated that consumers were taking advantage of “significantly reduced pricing” for battery swaps in a dire revenue warning that knocked $50 billion off Apple shares at the time.
The legion of battery swappers put a dent in sales of the new iPhone XR and XS models — which start at $999 and $749, respectively — whose uninspiring sales have caused Apple shares to crater.
“When you look at battery replacement, the lack of hardware innovation and pricing hubris on the XR, it’s been the trifecta that’s made it a nightmare iPhone upgrade cycle,” Wedbush analyst Dan Ives told The Post.
Ives added that the pricey new iPhones lack the “wow factor” that would inspire customers to spend $1,000 instead of $30.
“There’s a point where consumers are saying they’re not gonna spend this amount on a phone that comes out of Cupertino, outside of a small group of its install base,” he said.
If 11 million iPhone owners had opted to ugprade to the XS rather than swap out their batteries, Apple would have raked in nearly $11 billion in revenue, instead of just over $300 million on battery sales.
Apple last year slashed the price of the replacement from $79 to $29 after it was caught red-handed slowing down older iPhones to preserve their aging batteries.
Before the price drop, Apple’s policy was that a battery wasn’t eligible to be switched until it could no longer hold 80 percent of its original charge. It has since instructed employees to perform replacements regardless of battery test results.
Apple on Tuesday also unveiled a new smart battery case for its current line of iPhones. The external power packs will retail for $129.
Apple shares finished the day up 2.1 percent, at $153.07.
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