Hey.

In the background of iPhone sales, Apple is coming up with various unusual ways to squeeze the most out of a loyal audience. Analyst Min-Chi Kuo, specializing in Apple and quite accurately telling about the company’s plans, received information that Apple will remove the entire iPhone 12 line from the package, and these are four models, both a charger (plug) and wired headphones. This will reduce the size of the iPhone box, resulting in lower logistics costs. But apart from that, selling the same chargers separately will generate additional profits. For some reason, no one took the liberty of calculating how much Apple can earn, how it will be perceived by customers. Let’s fix these shortcomings together.

Today Apple’s lineup features regular, old 5W charging, with 18W fast charging being the entry-level.

The cost of charging for 18 W for the buyer is $ 29.99 (in Russia 2 rubles). It is assumed that along with the iPhone 939 there will be a new 12W fast charging, but the 20W model will gradually disappear from sale.

The lack of charging in the package is a huge disadvantage. The stories that this is a step towards ecology, a decrease in the number of charges, does not stand up to criticism. It is possible and only possible that the number of chargers will decrease, someone will use wireless chargers, someone will charge from other units, but the overwhelming majority will buy new chargers, this is what the stake has been made on. And the reason is simple – there are very few fast charges for iPhone users, since the old 5 W charger was used almost everywhere, it is outdated in every sense. And also consider that new chargers will be produced in individual packaging – hello, cardboard, paper and plastic. And unlike complete charging, there will be much more packaging here. I will not undertake to assess the impact on the environment. But in terms of prices, we can calculate how everything will happen.

In 2019, Apple delivered just under 200 million smartphones to the market, these are deliveries to channels. For example, you can look at the data from Strategy Analytics.

Of this number of devices, not all iPhones belonged to the latest generation of devices. You can estimate their number in different ways, but the range will be from 35 to 40% of all iPhones supplied to the market. Let’s use 40% as it’s better for Apple. Sales volume in 2020 remains a big question, but as the iPhone 12 lineup arrives at the end of the year, it’s worth looking at the 2021 impact and sales as this year’s numbers won’t be noticeable. If you want, you can count them, but here a big assumption is when these iPhones will actually appear on the shelves, how many will be sold. It is safer to count 2021.

Taking as a starting point what Apple is gradually losing in sales, it can be assumed that under an optimistic scenario in 2021, the company will deliver about 170 million smartphones to the market. Of these, at least 40% will be from the new line, this is 68 million smartphones.

It is unlikely that every iPhone buyer will purchase a charger separately. It is definitely impossible to expect that the ratio of sales will be one to one. Let’s assume three scenarios – 80%, 65% and 50%. The first scenario seems realistic to me, while the sale of charging to every second is a rather pessimistic scenario.

Thus, we get the sales volume of 20 W chargers (the minimum condition, these can be more expensive models, but this does not play a big role in our calculations).

Sales of chargers for the new generation of iPhone:

• 80% of buyers – 54.4 million units;
• 65% of buyers – 44.2 million units;
• 50% of buyers – 34 million units.

Now you need to understand what the economy is for Apple in removing the charger from the box. In the cost of the kit, this is a negligible figure, fast charging for 18 W for Apple costs 2.5 dollars (about the same figures for millions of copies for fast charging on the Android market). With the cost of a smartphone from $ 550 to $ 1 and more, the cost of the charger is negligible, this is the most inexpensive component. And it turns out that Apple is saving on matches? Not really, since the economy is present here.

Let’s assume that the retail charger costs $ 30, as does the 18W charge today. Each country has its own prices, but they are, plus or minus, comparable and never less than those in the United States. Therefore, the calculations will be in dollars, so it is easier to count.

The temptation to take $ 30 and subtract $ 2.5 from it is always great, but that would be wrong. In the prime cost of charging, there is another type of expense – the cost of sales, logistics. It can go as high as $ 1 per charger. Let’s play along with Apple and assume that the 20W charger will cost $ 3.5 before being sold to the consumer. Development cost? Zero. The cost of royalties? Absent.

It turns out that from $ 30 we subtract $ 3.5 and get $ 26.5, which Apple puts in their pocket. I assure you that such a rate of return does not exist practically anywhere, and these are de facto guaranteed sales – you need chargers, how else will you charge your smartphones?

Let’s calculate the money that the company will receive, let’s continue our calculations:

• 80% of buyers – 54.4 million units – $ 1.440 billion;
• 65% of buyers – 44.2 million units – $ 1.171 billion;
• 50% of buyers – 34 million units – $ 0.901 billion.

Even with the average scenario, Apple will receive an additional billion dollars in the first year. In 2022, if Apple sales 160 million units, and more than 70% of smartphones will be without chargers, the company, in the 65% scenario, will profit from the sale of chargers in the $ 1.9 billion (before taxes, this is also worth considering).

It may seem to some that one or two billion dollars is a little for Apple in the framework of the general business, but this is not so. The company squeezes out of different directions for a pretty penny like that, does its best to be paid literally for everything. And here’s an example of how it works.

For buyers, this approach is another argument against choosing smartphones from Apple, they are prohibitively expensive and at the same time poor in the package. This means that this approach will be sold exclusively under the auspices of caring for the environment, so that the impression is created that people are doing something useful. There is no talk of any ecology here, this was done to generate additional profit, and with an extremely high level of profitability.

There is only one question in this approach – no one does this, because when selling flagships, companies try to provide them with everything possible, so that a person does not experience difficulties with the first start, everything should be included. Here it is not, and it does not look like a revolution, some experiments in the past have been made in ultra-budget smartphones for Africa, but never for the mass market in America, Europe or Asia and for such price groups. And this is a purely negative story for both Apple and customers. At the moment, you can get small money within the company, an additional source of profit. But in the long run, this is a clear loss.

PS Those interested can count their numbers, build their own models and find out that under certain conditions in 2022 Apple will receive $ 2-3.5 billion from charges. It all depends on what is taken as a starting point.

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