Analysts are raising questions about the impact of coronavirus on Apple’s sales and the loyalty of Apple TV Plus users.
The week kicked off with TF International Securities analyst Ming-Chi Kuo reducing his iPhone shipment forecast by 10% for the current quarter over fears that coronavirus affect the company’s supply chain in China. Soon after, researcher Flixed said that many Apple TV Plus free-trial users aren’t keen to pay for the streaming-video service.
Apple’s troubles continued, when France announced that it had fined the company $27 million for a feature in iPhone batteries that slowed them down after prolonged use. Even Apple’s contracts with third-party repair companies came under fire for their “onerous” provisions.
It was a rough week for Apple. Here’s a summary of what happened:
How coronavirus affects Apple
The deadly respiratory illness coronavirus, which has infected thousands of people globally and killed hundreds, could impact Apple’s supply chain, analysts said this week. TF International Securities analyst Ming-Chi Kuo said Apple’s iPhone shipments could drop by 10% this quarter because of delays in Chinese production. Several other analysts who spoke to Fortune this week all agreed: The longer the coronavirus problem continues, forcing the Chinese government and companies to shutter production, the greater impact it will have on Apple’s financial results.
Apple TV Plus problems
Apple TV Plus is “failing to resonate with customers,” Bernstein analyst Toni Sacconaghi said in a research note this week. Fewer than 10 million Apple device owners have signed on for a free trial, according to Sacconaghi, and even fewer will become paying customers. The analyst said Apple TV Plus’ slow uptake could be due to its “limited content offerings.” Meanwhile, streaming-video industry watcher Flixed said this week that just 28% of Apple TV Plus users who had signed up for the seven-day free trial actually became subscribers. Among those who received a one-year free trial to Apple TV Plus by buying Apple devices, only 59% currently plan to sign up and pay $4.99 monthly after their trial expires. Despite the sobering news for Apple, there was a glimmer of hope: The people who Flixed surveyed gave Apple TV Plus an average satisfaction rating of 7 out of 10.
Get ready for CarKey
Apple is working on technology that would allow car owners to use their iPhones or Apple Watches as car keys, according to Apple-tracking site 9to5Mac. The feature, called CarKey, is hidden in the recently released iOS 13.4 Beta, the article said. Although Apple hasn’t confirmed its existence, 9to5Mac was able to determine that the feature will let users open the Wallet app on their iPhones or Apple Watch, and then start and turn off their cars. It’s unknown which vehicles the features could work with. Apple’s iOS 13.4 is expected to be released in the coming weeks.
France fines Apple
France has fined Apple 25 million euros (about $27 million) for throttling iPhones that have aging batteries. In a statement this week, investigators said that iOS software updates in 2017 intentionally slowed down performance on older iPhones, like the iPhone SE and iPhone 6, and that the company failed to notify users about the change. Apple acknowledged that it released the software with throttling, but denied France’s accusation that it did so to push owners of older iPhones to upgrade. Apple said the throttling safeguarded older batteries and allowed aging devices to last longer.
Apple’s repair program policies
Last year, Apple said that it would allow small business owners to provide repairs to consumers for their Apple devices. This week, tech news site Motherboard obtained a copy of the agreement between Apple and those repair providers that raises questions about the requirements involved. The agreement lets Apple inspect providers at any time, with no notice, and even inspect providers up to five years after the they end their agreement. In interviews with Motherboard, attorneys and repair advocates called the agreement “onerous” on the providers.
The successful Apple Watch
Apple shipped 31 million Apple Watches worldwide last year, Strategy Analytics said this week. Apple outpaced the entire Swiss watch industry, which accounted for 21 million shipments last year. Apple Watch shipments were up 36% year-over-year, compared to a 13% year-over-year drop on Swiss watches.
One more thing…
February is Heart Month, and to celebrate, Apple is offering the same $100 trade-in credit value on old Apple Watch Series 2 and Apple Watch Series 3 models that is available for Apple Watch Series 4. Apple had previously offered credits of $60 to $70 on Series 2 and Series 3 models. The credits can be used for buying an Apple Watch Series 5.
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—Governments deploy surveillance tech to track coronavirus victims
—How marketers are increasingly using A.I. to persuade you to buy
—Predicting the biggest tech headlines of 2020
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