Apple Inc. (AAPL): Old iPhones With New Releases – A Pattern?

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Harvard University Ph.D. student Laura Trucco and economics professor Sendhil Mullainathan have discovered an interesting thing about Apple Inc. (NASDAQ:AAPL)’s new iPhone launches. Every time the tech giant launches a new iPhone, there is a dramatic surge in the number of Google searches for “iPhone slow.” Does that mean Apple deliberately slows the old iPhones to push existing customers into buying a new one?

Apple has all the means and motives to do it

Google Trends show that the spike in searches occur when the company releases a new iPhone, not when it is announced. It could be a pre-programmed, deliberate action to nudge people into buying new phones. Though any company that makes complex electronic products and software can do it, this seems to be highly unlikely in Apple’s case.

Mullainathan said the Cupertino-based company cannot afford to cripple its existing devices to prod customers into upgrading, even though it has the motives and means to do so. And the reason is Android. If iPhone users constantly find their phones slowing down with each new release, they would switch to an Android device that has a longer life. Moreover, there would be significant legal risks in pursuing that strategy.

Apple has the means because it makes the device as well as the operating system, and makes money on hardware. In contrast, Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) doesn’t have this kind of incentive as it makes little money on hardware. Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) has the same motives as its Cupertino-based rival, but it lacks the means to hobble performance.

The spike in searches occurs only for Apple devices

Mullainathan and Trucco also looked for spikes in Google searches for “Samsung Galaxy Slow.” There was no noticeable correlation between the smartphone release dates and the phrase. The spike happens only for iOS devices. It supports the conspiracy theory that Apple throttles older iPhones to encourage upgrades.

Samsung gaalxy Slow

However, you can’t say that for sure by observing Google Trends data. The spike in “iPhone slow” searches might also occur due to the OS updates. Android is far more fragmented compared to the iOS. Currently, only 18% of Android devices run KitKat. In contrast, Apple has shifted about 90% of its worldwide mobile users to the iOS 7. Therefore, an update to the iOS would have more pronounced performance degradation than an Android update.

Apple is expected to launch its upgraded iPhone 6 in September.

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