Apple are under fire for allegedly slowing down our handsets and creating a greater need to upgrade to the latest models – a scandal that has broken over the last couple of weeks and shows no signs of going away. A question worth asking ourselves, however, is – will it matter? Given Apple’s prominent position in the marketplace, die-hard global following and colossal advertising funds, will this fresh allegation have any impact whatsoever on Apple’s bottom line? If history tells us anything, it’s that it’s doubtful. Let’s look at why…
In 2013, Apple earned approximately 70 per cent of the worldwide profit in smart phone sales. In the same year, they sold over 150 million iPhones, (a figure that has since peaked at 231 million), at anywhere between £400 and £1000 per unit depending on the model. Let that sink in for a moment…
You’d be right to assume that Apple have made big money – Over the last six years, they’ve averaged an annual net income of 43 billion US dollars, placing themselves quite firmly as industry leaders in smart technology. According to recent reports, if Apple were a country it would be the world’s 17th largest economy.
With millions of disciples across the planet, trust in Apple has always been consistent. In fact, a survey conducted in 2014 showed that the majority of people confess to having ‘blind loyalty’ towards Apple, claiming they’d switch to the latest Apple product without considering major rivals like Blackberry and Android.
People increasingly report they can’t live without their iPhone and that their phones play a role in every aspects of their social and private lives. If that weren’t extreme enough, an experiment involving fMRI imaging demonstrated that participants’ brains responded to images associated with the iPhone similarly to the way they respond to religious imagery – indicating the depth of the relationship that has emerged with these handy devices.
But while Apple continue to be the holy grail of technology companies, multiple scandals have broken over the last decade that, in theory, should have deterred consumers from purchasing from them. For example, in 2015, two Miami residents publicly sued Apple over a software update that had been installed onto all iPhones, resulting in storage space shrinking by over 20 per cent. Without notifying consumers of this, the plaintiffs argued that the company were mis-selling iPhones on the basis they feature more storage than is actually available to the user. Another lawsuit filed against Apple alleged they had allowed advertisers to illegally track users’ movements, and now, Apple are back in the spotlight after it came to light that batteries were being slowed on older iPhone, forcing users to abandon their handsets and opt for newer, more expensive ones.
So what did Apple have to say about the latest allegation? Well, they didn’t exactly take full responsibility for the problem. Instead, they said that iPhone batteries naturally age and slow over time, and, in a nut shell, tired batteries would be less likely to handle the latest software updates in the same way new batteries would. They did, however, attempt to remedy the situation by offering a reduced battery replacement price to those affected (not free, just reduced), better visibility in regards to battery health and an ongoing commitment to excellent customer service (we aren’t quite sure what that means).
Should users take Apple up on their reduced-cost-battery-swap deal, Apple are set to lose approximately $10 Billion – not an insignificant figure, but also not a deal breaker for such a large corporation. Lawsuits are, of course, mounting – so it’s more than likely that there’s a larger financial loss on the horizon, even if it is just in lawyer fees. What’s more interesting is the impact on customer loyalty and, consequently, future iPhone sales.
Diverting slightly, it’s worth looking at other brands that have been hit by their own scandals, and whether or not their companies folded or thrived during turbulent times. For example, just three years ago Volkswagon were hit by a huge emissions fixing story that led to 17,000 complaints and a 2016 loss of over $18 Billion. But as of 2017, Volkswagon were still the second best selling car manufacturer, sandwiched between Ford and Vauxhall, and remain one of the biggest manufacturers in the world. While there was a dip in sales in the immediate aftermath to the emissions fix, sales began to rise again in no time.
So can brands just get away with this stuff pretty much unscathed aside from a financial hit or two? If so, why is this – is it just about consumer apathy? Are brands personified in such a way that their human-ness allows them to be forgiven for ‘mistakes’ made? What would it take for the public to take action? Perhaps it is testament to the fact that brands such as Apple, Volkswagen, Dove and Pepsi as well as the many others who have faced recent scandals are strong enough to withstand… anything?