The thing that really shocked me about Apple’s revenue warning today wasn’t that they’re now expecting to make a lot less money than predicted in Q1; that is surprising, but it’s business and it was bound to happen eventually. No; what got me was their acknowledgment that the battery replacement programme has potentially hurt upgrade rates:
While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.
– Tim Cook Letter from Tim Cook to Apple investors (Emphasis mine)
That’s dangerously close to admitting that they knew old batteries made phones unusable and quietly allowed that to drive people to buy new ones. Do I think that’s the case? I don’t know; I’d hope not, but who —outside Apple— can really say? It would certainly be a strange company that voluntarily closed-off a revenue stream, even one that was bad for users. But then, that’s how Apple presents itself; the company that puts user experience above all-else.
One thing’s for sure; if this isn’t them intentionally admitting batterygate was driving revenue, then it’s a shockingly sloppy unforced error.
Of course it was a pretty big revenue miss; maybe having a credible explanation is the lesser of two evils, and they’re just prepared to eat the PR pain of the battery revelation (true or otherwise.) Or maybe they figure the battery thing is a lost cause anyway, since most people already believe they throttle older phones?
Gruber has a similar take.
Update: I’ve seen a few people suggesting that Apple meant that they were making a loss on the battery replacements. That’s definitely possible; they will definitely have lost (some - but surely nowhere near $7bn) revenue by selling replacement batteries at a steep discount. If this is what they’re trying to say, then their wording really was a blunder; it was way too easy to read as admission that the batterygate critics were right all along.