iPhone Battery Replacement Program Could Hurt Apple’s Sales: Barclays

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Following the public outrage after Apple Inc. (NASDAQ:AAPL) admitted that it slows down the older iPhones, the company announced a battery replacement program for just $29, instead of the usual $79. Barclays analyst Mark Moskowitz (via CNBC), however, feels that replacing the battery could prove a headwind for the iPhone sales.

Battery replacement program could prove very costly

According to Moskowitz, around 77% of iPhone users would be eligible for the replacement of the batteries. Further, the analyst noted that in their base case scenario, if 10% of those users take the $29 offer and around 30% of them decide not to upgrade this year, then around 16 million iPhone sales would be at risk. This means, a 4% downside to Barclays’ current revenue estimates for the company.

“While this is a good PR move for Apple to resolve the issue, we are concerned it could be a mild headwind for iPhone unit sales if more iPhone users decide to take the offer instead of upgrading to a new device,” the Barclays analyst said.

Despite Apple’s effort to explain why it slowed older iPhones, several lawsuits are filed against the company. And recently, the Brazilian state agency Procon-SP asked Apple to explain why it decided to slow down the older iPhones, and how Brazilian iPhone users would be able to get their hands on the battery replacement, according to Reuters.

In a blog post, Procon-SP informed that a notice had been sent to Apple seeking more information on the replacement of the batteries and the models eligible for replacement. For the U.S., Apple is charging $29 for the battery replacement. However, this replacement price would vary from country to country. Under Apple’s battery replacement program, iPhones affected by dwindling batteries can be restored until the end of 2018.

Apple on why it slowed older iPhones

According to Apple, the lithium-ion batteries on which the iPhones run, slow down after a certain period of time. As a result, the iPhone turns off frequently even when the batteries show a charge enough to run for some more time. For instance, an iPhone showing a 20% charge may be inefficient to power the phone, and could shut down.

Having an iPhone that goes dark could be disappointing, especially when a user is performing some major functions, such as using mobile apps to navigate in unfamiliar streets. Slower battery issues affect the iPhone 6, iPhone 6S, iPhone 6 Plus, iPhone SE, iPhone 7, iPhone 6s Plus and iPhone 7 Plus. The performance of the phones is impacted during peak power usage.

The Cupertino, California-based company claims that the phones were made slower to increase their lives as long as possible. However, the customers feel otherwise, stating that Apple slows down the older iPhones to compel them to upgrade to newer models.

“First and foremost, we have never — and would never — do anything to intentionally shorten the life of any Apple product, or degrade the user experience to drive customer upgrades,” Apple said, replying to the allegations.

Apple says that it has always aimed at creating the products that customers love, and will always strive towards making iPhones as long lasting as possible.

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