Apple’s knee-jerk reaction to replace fading iPhone 6, 6 Plus, 7, 7 Plus and SE batteries is turning out expensive. Perhaps it could have benefited from asking an accountant before it responded to consumer pressure. Forbes has been running numbers and it figures Apples cheap batteries could costa plenty trouble. And that plenty trouble could amount to billions of dollars.
Tim Cook Reins In the Cost of Apples Cheap Batteries
We are confident Tim Cook had a hand in the one-battery-per-iphone decision. This is a critical moment in the company’s history, and Forbes believes this ‘could have a material impact on the company’s finances’.
If you were planning to double-dip and get two of Apples cheap batteries, prepare for disappointment. MacRumors spotted a few new characters on the iPhone service page. Moreover, this small print clearly states “battery service at $29 may be limited to one repair per iPhone.” So you get to pay the standard $79 for the second one unless presumably the first one fails.
How Mark Moskowitz Calculated the Cost for Forbes
Mark is Barclay’s Apple Analyst. Yep, they have one of those, and we’ll assume he knows his math. Mark believes 519 million iPhones qualify for one of Apples cheap batteries.
In setting the cost at around ten billion dollars, Mark assumed 10% of owners will take Apple up on its offer. Remember many of the older phones may already be in the recycling tip.
Mark thinks 30% of those owners will decide to keep their upgraded iPhones longer. This will knock Apple’s cash flow from new phone sales too.
We agree with Forbes’ writer Chuck Jones that Mark’s guesstimates are very conservative. We concur with his conclusion the other 70% may pass the upgraded phone to a friend, or trade it in, (or even send it down to the charity shop).
After all, who would want to throw away a classic iPhone in perfect working order? Chuck believes a worst case scenario could see Apples cheap batteries costing the company as much as $36.4 billion this year. That’s 13% of revenue and a hard knock for any company.
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Preview Image: Apple 7 Plus
