Apple’s offer of low-cost battery replacements for older iPhones has not been enough for unhappy consumer groups
Apple’s offer of low-cost battery replacements for older iPhones has not been enough for unhappy consumer groups © Bloomberg

Batterygate is proving to be a long, drawn out saga for iPhone maker Apple. What started out as a Reddit post on slowing smartphones has blown up into either a confession or a misunderstanding, depending on your allegiance. Reports of a multi-state US investigation threaten to drag the fight out even longer. 

In late 2017, Apple confirmed that software updates had intentionally slowed older phone performance. This, it said, was necessary to compensate for ageing lithium-ion batteries. The explanation is reasonable. Conspiracies suggesting Apple was trying to force users into replacing handsets make little sense. Without the slowdown smartphones had a tendency to suddenly switch off. Shutdowns would chivvy customers into buying replacements far more quickly than slowdowns.

Still, Apple’s apology for not being clear and its offer of low-cost battery replacements has not been enough. Unhappy consumer groups filed lawsuits. In the US, a settlement means those with affected smartphones can claim a whopping $25 refund. The company has also been fined €25m by France’s competition and fraud watchdog. The US investigation could mean more penalties.

Such costs will do little financial damage to a company with a near $194bn cash pile that has just reported a blowout quarter. But it will chip away at consumer confidence.

Apple is already struggling to encourage customers to let go of their handsets. It remains the most popular smartphone provider in the US but users are holding on to handsets for longer. According to data from trade-in provider HYLA Mobile, the average age of iPhones traded in was three years in 2019, up from just over two years in 2016.

A chord chart showing the US market share for smartphones by vendor in 2019. Apple leads with 55%, Samsung second with 25%. The chart also shows loyalty and brand switching behaviour based on online trade ins, which suggests that 75% of Apple iPhone purchases are from existing iPhone owners

Phone carriers such as AT&T used to offer contracts in exchange for free phones, using upgrades to encourage renewals. As phones became more expensive handsets were sold separately and upgrades fell. Apple customers are at least loyal - three quarters stick with iPhones when making online trade-ins, according to price comparison site bankmycell. But in order to encourage more frequent upgrades Apple needs to produce standout new models, not slower old ones.

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