Apple will be significantly affected by its decision to offer $29 battery replacements to address the iPhone battery controversy, as the company stands to lose iPhone sales worth over $10 billion.
Making matters worse is that despite the cheaper battery replacements and the potential lost sales, the controversy will likely not end there.
The iPhone Battery Controversy
In mid-December, a Reddit thread exploded into a full-blown investigation on whether Apple purposely slows down the performance of older iPhones to make degraded batteries last longer.
Apple later confirmed that it was indeed throttling iPhones. However, the company explained that it was doing so to prevent random shutdowns caused by old batteries, and not to force customers to upgrade to the latest iPhone models.
To apologize for the issue, Apple reduced the cost of out-of-warranty iPhone battery replacements to only $29, from the original price of $79. Customers across the world with iPhone 6 and later models will be able to avail the offer throughout 2018.
Apple To Lose $10 Billion In iPhone Sales
The replacement program for only $29 can be considered a win for customers, as they will be able to improve the battery lives and performance of their older iPhones.
However, according to Barclays, the decision will be a costly one for Apple.
"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," wrote analyst Mark Moskowitz and his team.
According to Barclays' model, Apple may sell as many as 16 million fewer iPhone units due to the $29 battery replacement program, which translates to lost revenue of $10.29 billion. Apple will be able to generate about $1.56 billion in revenue from the estimated 54 million battery replacements, but that will not be enough to offset the potential lost sales.
According to Barclays, there are four reasons for the massive impact on iPhone sales. First, the public is generally aware of the replacement program due to the popularity of the controversy, and second, the $29 is an affordable price for a boost in iPhone performance and battery life. Barclays also noted that battery performance is the top reason for upgrading to new iPhone models, and lastly, because the replacement is offered to all iPhone 6 to iPhone 8 owners, customers might prefer to replace batteries instead of an upgrade.
iPhone Throttling Issue Not Yet Over
Customers may now avail the $29 battery replacement for their iPhones through Apple's support page, but this likely not the end for the iPhone throttling controversy.
Apple is still facing class action lawsuits over the issue, and it remains to be seen how the legal action goes.