Apple Says Cheaper iPhone Battery Replacements Hurt Sales

Fewer people are upgrading devices following Apple's $29 battery program.

Apple Store

Image via Getty/Zhang Peng/LightRocket

Apple Store

It was a rough day for Apple.

Shares of the tech giant plummeted Wednesday, shortly after Tim Cook announced the company had slashed its revenue guidance for its fiscal first quarter. The CEO shared the news in a public letter addressed to investors, stating Apple lowered its revenue expectation to $84 billion, down from its previous projection of $89-$93 billion. Cook said the adjustment was due to "emerging market challenges," the strength of the U.S. dollar, as well as weak iPhone sales.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," Cook wrote. "In fact, most of our revenue shortfall to our guidance, and over 100% of our year-over-year world-wide revenue decline, occurred in Greater China across iPhone, Mac and iPad."

Cook partially blamed the company's battery replacement program for lackluster iPhone sales. The program, which ended on Monday, replaced out-of-warranty batteries for only $29, about $50 drop from the original price. Apple reduced the fee after it admitted to slowing down older iPhone models to preserve their outdated batteries, just as many iPhones users had suspected. The tech giant attempted to make it up to customers by lowering the costs of new batteries; however, it seems the program has hurt iPhone sales. Which make sense: Most people would rather spend $29 for a replacement battery, than upwards of $1,449 on a phone upgrade..

"While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance," Cook wrote, "including consumers adapting to a world with fewer carrier subsidies, U.S. dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements."

Cook concluded his letter on a positive note. He highlighted increased revenue in services and accessories, as well as iPads, Macs, and wearable tech sales. 

"Most importantly, we are confident and excited about our pipeline of future products and services," Cook wrote. "Apple innovates like no other company on earth, and we are not taking our foot off the gas."

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