Jean-Louis Gassée, on Apple’s earnings warning:
I have a hard time believing that the $29 limited time offer had a significant impact on Apple’s numbers. Did Apple replace hundreds of thousands of batteries? I doubt it. At 100 replacements per Apple Store times 500 stores, that’s 50K happy customers and only $50M in missed new iPhone revenues. I’d have to be off by a factor of 10 — half a million iPhone battery upgrades, one thousand repairs per Apple Store — to approach a mere $500M in missed revenue.
[Update: My battery upgrade discussion above is wrong in two ways.
As readers pointed out, my numbers estimate might be too low.
And… the error might not matter. Apple had full knowledge of battery replacement numbers when issuing its Nov 1st guidance.]
I’m pretty sure Gassée’s back-of-the-envelope estimate of the number of batteries replaced was way too low. During Apple’s all-hands meeting January 3, Tim Cook said Apple replaced 11 million batteries under the $29 replacement program, and they’d have only anticipated about 1-2 million battery replacements normally. (The fact that Cook held this all-hands meeting was reported by Mark Gurman at Bloomberg, but the contents of the meeting haven’t leaked. Well, except for this nugget I’m sharing here.)
But Gassée’s second point still stands: the battery replacement program ran all year long, so even if it was more popular than Apple originally expected, why wasn’t it accounted for in guidance issued on November 1 — 10 months after the program started? My guess: the effect of the battery replacement program on new iPhone sales wasn’t apparent until after the iPhone XR and XS models were available. A few million extra iPhone users happy with the performance of their old iPhones with new batteries — who would have otherwise upgraded to a new iPhone this year — put a ding in the bottom line.