Why Apple controversy won’t repeat

It was December 2017 and Apple Inc’s recently released iPhone X was delighting a small cohort of owners with its upgraded technology and blazing performance. At the same time, a different cohort of iPhone owners was dismayed by the slowing performance of their older models. The culprit, it turned out, was Apple: It had sent a software update that slowed the performance of older iPhones as their batteries aged, and failed to notify their users. The company reached a class-action settlement that could pay as much as $500 million to iPhone owners to resolve what was nicknamed “Batterygate.”
Apple admits no wrongdoing and has long held that that episode was a misunderstanding. Many consumer advocates thought otherwise, going so far as to suggest that Apple was trying to nudge consumers into buying new iPhones. Whatever the truth, it’s unlikely that Apple will ever again install a secret, performance-reducing feature in a product. But it’s not the multimillion-dollar lawsuit that will keep them from doing it. Instead, Apple’s growing business selling used iPhone gives the company a powerful financial incentive to
promote and defend the handset’s durability.
The scratches and dings that inevitably accrue to an iPhone have long been a concern to owners. But so long as carriers subsidised the phones (in the US), and owners could look forward to an upgrade every year or two, Apple could focus its marketing on new features, not phone hardiness. In the mid-2010s, all of that changed. Carriers began ending phone subsidies, forcing owners to face the true cost of their devices for the first time. What was once a $200 phone became a $750 phone.
Smartphone innovation began to level off, further reducing reasons to upgrade. In 2019, a survey of 3,650 US mobile-phone owners found that one-quarter held onto their previous device for at least three years, an 18% increase over 2017.
No company feels that shift more keenly than Apple: It hasn’t seen big year-over-year gains in iPhone unit sales since 2015. To make up for the lost revenue, Apple has been raising prices and growing other lines of business, including “services,” a catch-all category that includes AppleCare+, the company’s extended warranty program, plus Apple Music, iCloud storage and more. That iPhone has roughly 1 billion active users gives Apple plenty of potential customers to whom it can sell services.
—Bloomberg

Adam Minter is a Bloomberg Opinion columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade” and the forthcoming “Secondhand: Travels in the New Global Garage Sale.”