Apple Tells Congress It Hasn't Been Profiting From Repairs in Response to Antitrust Probe

[Peperino]

When you have to repair 1 out of every 2 laptops sold within the first two years of its life, across 4 years of sales and 3 unique models, it's really hard to turn a profit.

And speaks of the pathetic Apple quality control, and poor laptop design of the entire laptop line up 2016+
Poor quality control or just design arrogance that took 3 years to fix a keyboard failure?
[automerge]1574269383[/automerge]

I never said they were easy for users or any other untrained personnel to repair. My point is that apparently it’s not part of some nefarious scheme to bilk customers.

Stop defending the indefensible... It is simple math. If something is much more difficult to repair because components are soldered, glued and riveted, it will be way much more expensive to repair either for a third party or for Apple. So plain and simple if your computer is out of warranty, the repair will be so costly that you might as well buy a new computer...

But it seems that you work for Apple since for you 2+2 is 3...

 

[mikethemartian]

Do they include the fees they receive for selling Apple Care in that calculation?

 

[laz232]

$169 for a new screen on an iPhone 6s Plus, the entire device is worth barely $200 on the used market. Some people will choose to buy a new iPhone at that point, and this is a way Apple indirectly profits from high repair costs that can't be easily measured.

Comparing the screen repair cost to the device value is not the correct comparison to make. One needs to look at the BOM cost and associated labour.

Upgraded Components in iPhone 6S Plus Costs Apple an Extra $16 Per Device - Omdia

Upgraded components in the new iPhone 6S Plus cost $16 more than the components in the earlier iPhone 6 Plus.

technology.ihs.com

Estimated display cost is 55USD, plus, say 1hour labour and some taxes. would indeed end up somewhere around 120-130USD, so including all the training, admin postage etc, Apple probably does not make much on repairs.

But many people can perform the labour themselves - manufacturers should be forced to allow consumers to purchase official parts (especially batteries) for a nominal markup, say 20%, so that you could buy the official screen part with gaskets for 75USD. Installation and warranty are then fully on the shoulders of the consumer.

 

[Coconut Bean]

They already are. The Apple TV and HomePod are both selling at cost or below. Not now with discounts but when they were introduced. You can't squeeze all that incredibly high tech in a HomePod and sell it for $349. It was a steal at that price, sound-wise. Now that you find them for $100 off occasionally, it's almost theft.

For sure they spent gazillions on convincing people like you that it's so high tech that it costs more than $350 to produce.

 

[I7guy]

Lies, Apple! The same way Apple did not benefit from throttling iPhone batteries? What utter lies, Apple. Shame on you, Tim Cook.

Does Apple not profit from selling AppleCare+ insurance by selling poorly protected hardware? Which other tech company sells its own-brand insurance alongside its hardware?

Apple benefits from making hardware more difficult to repair and easy to damage (with dust and spills). Customers opt to purchase new hardware instead of repairing their existing Apple hardware.

My wife spilled water onto the keyboard of her MacBook Air a couple months ago, and the MBA turned off within seconds. While researching the issue online, I discovered Louis Rossmann on YouTube and follow him closely now. I took the device to Rossmann based on his transparency.

He makes no secret of his hate for Apple and how difficult, and sometimes impossible, Apple has made it for independent repair/service providers to fix Apple hardware, namely MacBooks.

Watch and learn: How Apple is shaping the future of repair.

Anecdotal hyperbolic nonsense, this is.
Not profiting is not the same as not covering costs.

 

[Jetfire]

I believe them on the repair point when you factory in all the free battery replacement and a decent recall history. I found there repairs to be pricey in some cases, but they have significantly higher overhead than your local iPhone repair shop.

Another point of reference I have is on an iPod touch that I paid $400 for two years ago. It failed and there was a fixed price repair/replacement cost of $143 that included shipping both ways. Turnaround time was less than 5 days including the weekend. The iPod touch just died while using it and it had never been dropped.

For even saying that Apple is losing money on repairs and justifying it. Keep in mind it's a numbers/accounting/tax game. This is also why they don't want third party repairs for comparison. Say I have a $100 dollar screen at cost but retails for $200. I could cost it out a $250+ in a repair cost. I can do this by saying I paid the retail cost plus my markup. When in the real world I could have paid less then $100 if I bought in bulk. I could even pass them though another company to drive up the price/markup.

You can also inflate your Labor cost. Charge $150 an hour while paying the person doing the work $15. Yes there are overhead cost making the person doing cost per hour more than $15. But if those overhead cost are taking care of by other means it's still a lot less the $150.

When I worked at one company doing manufacturing, we had an hourly rate. This rate covered shop labor, building cost, utility cost, office personal cost and other overhead. Well if we did over a certain amount of business in a year (making our nut as we called it) our labor rate profit would increase on anything above that certain amount. Since almost all the overhead is taking care of.

By the way if you think Apple's markup is by try buying replacement Windows.

 

[827538]

Apple wanted almost $1000 to repair my wife's MacBook.
The screen was damaged and was her fault, but the keyboard was not working and was meant to be replaced by their keyboard repair program (for the second time I may add as we all know those butterfly keys are no where near durable enough). The tech called us and informed us there was water damage and thus it would cost ~$1000 to repair instead of the $400 or so for the display.
Utterly ridiculous, so now it's just a pile of electronic waste as Apple's repair costs are unfair and absurd.

High repair costs no doubt contribute to an increase in new replacements. For all Apple's virtue signaling about the environment they'll only actually do stuff that benefits them - like solar to reduce their energy costs.

I'll still buy Apple products as my wife and I like them but Cook is a POS virtue signaler who only cares about the bottom line, people seem to be maligned for missing Jobs but under his watch Apple was a much more user focused company rather than a purely profit driven one - the shift has been clear to see.
I really believe batteries should be far easier to replace as well as they simply do not last, not glued in and potentially machine breaking to remove.

 

[mikayla82ca]

Hmmm I thought Apple deliberately makes their products nearly impossible to repair (using glue, rivets etc.) so they can profit from the huge repair fees?

Guess that was just the usual Apple-hate crap. How surprising

No they just look you dead in the eye and say “it’s going to cost (insert crazy amount here) to fix it. Maybe it’s time for an upgrade anyway?” So of course there’s no profit in repairs, they push you to buy a new one.

 

[SVTmaniac]

And why does congress care?

 

[gaximus]

I have no doubts about that Apple has records for the repairs it AGREED to perform

Do they have statistics on the number of customers they quoted repair charges at 70% the price of a new device per chance?

What does this have to do with anything? What they are saying is that what they charge for repairs, is not enough to make a profit. If it costs 70% to fix it, and they don't make a profit off of the repair, then they actually aren't charging enough.

 

[coolbeep]

Well, yea. They aren't taking into account all the people they told they can't repair their device so they have to buy a new one. Or the repair cost was so high they might as well buy a new one.

I was once quoted $1200 for a new logic board and top case in 2008...I went home, held "shift" for literally 20 minutes straight trying to get it to safe boot. And then it did and that PowerBook is still rocking today. My mother was quoted $700 for a new logic board for her $900 Air (also an easy fix when I visited her - the "genius" bent the battery connector pins, they are so frustratingly careless).

 

[garya73]

Rather than losing money on repairs, wouldn't it make more sense to just make them higher quality so they don't fail to begin with? Seems it would be a lot cheaper to improve the quality and pay Chinese wages than make them cheaper and pay US (or whatever country you are in) wages when they have to be repaired.

Doesn't make sense to have so many of them failing that you have to spend a ton of money fixing them.

Of course I am not including abuse/accidents like dropping it.

Or make them repairable by 3rd parties so customers can take them to a business that focuses on repairs and does it at a profit. They could even farm out warranty work like auto manufacturers do with dealers.

 

[Khedron]

What does this have to do with anything? What they are saying is that what they charge for repairs, is not enough to make a profit. If it costs 70% to fix it, and they don't make a profit off of the repair, then they actually aren't charging enough.

Of course it doesn't cost 70% to fix it the point is to quote such a high price no sensible person would pay it and would buy a new device instead.

Let Apple tell us how many people coming in for repairs are "convinced" to buy a new device instead, and how much they make on that overall transaction.

 

[garya73]

Apple should break the data down by repairs done under warranty vs not under warranty. Repairs done under warranty by definition leads to a loss for Apple. But out-of-warranty repairs are completely different, given the astronomical costs that Apple charges (for a new logic board, new display, etc) relative to other repair shops. Need a new iPhone X screen from Apple? 500 dollars. Compare this to a local repair shop that charges only 200 dollars for the exact same job...

Also, another point, by soldering memory/ssd/etc to the logic board, Apple makes it almost impossible to repair the machine if one of those components fail. Essentially the user has to buy a whole new logic board, inflating the cost of a repair. It's a free market, but I think us consumers would greatly benefit by these companies being forced to sell devices that are more repairable than current flock of devices. What functional reason is there for the the memory, SSD, battery, and other components to be glued or soldered down, other than to enhance profits and discourage user/third party repair?

If you take into account the profit from the original sale, I doubt the cost to repair under warranty would eat up all that profit plus the costs to make the repair.

 

[mikethemartian]

Do any of the naysayers realize Apple will have the financial records to back their claims? This will all come out later anyway, so it would be disastrous for Apple to lie about it.

Well this falls under managerial accounting vs financial accounting. Financial accounting is regulated. Managerial accounting is what ever the management wants it to be.

 

[NickName99]

The use of soldered-on memory and SSD saves Apple on repair/support costs. Fewer variables, fewer moving parts.

If they go with modular memory and storage, it introduces more unknowns when diagnosing problems. It could provide a revenue stream if they sold upgrades, not to mention revenue from out of warranty service.

I think Apple could actually profit *more* if they went with modular memory and storage, but it could also burden their support infrastructure more heavily, and potentially compromise their reliability ratings. I think they prefer keeping it simple.

You can bet they‘ve done their research on this topic, and continue to run the numbers from time to time.

 

[bsimpsen]

My own personal experience with Apple repairs over the last 40 years is that they bend over backwards to make things right.

My own personal experience with repairs (in warranty and out) at companies I've worked for throughout my career is that they are not operated for-profit. Doing so would warp the incentives within an organization, ultimately to the detriment of the overall business. Do remember that labor costs for a repair, and the costs of repair parts, will necessarily be higher than on the production line. The economies of scale are not there for repairs. No repair depot has the benefit of moving thousands of parts/day, of highly automated facilities to effect repairs, or labor at factory rates.

The general public's ignorance of the way volume manufacturing and individual repair works does not make the underlying realities go away.

When I was a teen, 50 years go, I recall reading, in some car magazine my father got, that to build a Cadillac from parts ordered through a GM service department, and paying yourself nothing to do the work, would cost at least a quarter million dollars. At that time a new Cadillac was $5000.

 

[NickName99]

Apple wanted almost $1000 to repair my wife's MacBook.
The screen was damaged and was her fault, but the keyboard was not working and was meant to be replaced by their keyboard repair program (for the second time I may add as we all know those butterfly keys are no where near durable enough). The tech called us and informed us there was water damage and thus it would cost ~$1000 to repair instead of the $400 or so for the display.
Utterly ridiculous, so now it's just a pile of electronic waste as Apple's repair costs are unfair and absurd.

High repair costs no doubt contribute to an increase in new replacements. For all Apple's virtue signaling about the environment they'll only actually do stuff that benefits them - like solar to reduce their energy costs.

I'll still buy Apple products as my wife and I like them but Cook is a POS virtue signaler who only cares about the bottom line, people seem to be maligned for missing Jobs but under his watch Apple was a much more user focused company rather than a purely profit driven one - the shift has been clear to see.
I really believe batteries should be far easier to replace as well as they simply do not last, not glued in and potentially machine breaking to remove.

In short: your wife spilled something on her laptop, damaging it, and you’re upset that Apple won’t fix it for free. I would be upset too, I sympathize, but also, I mean, she’s dropping her laptop and spilling stuff on it. Maybe get her a military grade field laptop or something?

 

[err404]

It is probably technically true that the repair business at Apple is not a profit center. Once you figure in the time talking to customers/making repairs, easy return/exchange policy, warranty repair, extended repair programs etc.
Put it this way, over the years that I have been a customer, after factoring in the repairs that I have paid for, Apple is still losing on the cost of that service.
That said, the cost for covered warranty service should be factored into the sale price rather than augmenting the repair price. Still with a bit of creative accounting, Apple isn’t lying.

 

[milkrocket]

There are hundreds if not thousands of repair shops, who can beat Apple prices. If Apple can’t do it, then let the others take over.

 

[MRrainer]

It's all a question on what exactly you take on the balance-sheet.

E.g. if they didn't do repairs in-house, they could rent smaller places for the stores etc.pp.


But you hear about people who brought their iPhone in for a repair and the technician broke it in the process. They then sometimes walk out with a brand new iPhone.
Apple has to eat those costs.

I've never had to repair anything, but from looking at the prices for simple things like battery exchanges - I don't think they're too expensive.
I rarely work for free and I don't assume that others like to do that either.

 

[gaximus]

Of course it doesn't cost 70% to fix it the point is to quote such a high price no sensible person would pay it and would buy a new device instead.

Let Apple tell us how many people coming in for repairs are "convinced" to buy a new device instead, and how much they make on that overall transaction.

Ah, I see your train of thought now.

 

[victorm1]

The only way that repair costs could possibly exceed profits is if they’re lumping together paid repairs with in-warranty ones.

 

[Zance]

As someone who has worked as a Genius - I call BS.

Sorry, but charging more than the cost price of an iPhone to repair a minor fault, which they then repair and send back out - is profit making.

Also - the prices of some of the service parts are atrocious. We used to charge like £350 for a failed iMac HDD.

Effectively what they do is charge far more than (new) retail for refurb parts, and only warranty them for 90 days. labour costs are minimal considering most geniuses make < £10/hour.

And I call BS on you ever having been a Genius I’d you’re seriously going to try and say they make the <10£/hr

 

[Appleman3546]

Their answer in question 2 why users cannot set a default app for safari is why anti-trust exists. Users should be able to decide for themselves, not be forced because Apple believes or wants it to be superior. Does Apple not trust its own users to decide for themselves or are they afraid of competition?