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Apple Tells Congress It Hasn't Been Profiting From Repairs in Response To Antitrust Probe (macrumors.com) 148

Posted by msmash from the closer-look dept.
As part of an antitrust probe, the U.S. House Judiciary Committee sent a letter to Apple in September with questions about its policies for the App Store, product repairs, and more. Apple has since responded, and while many of the responses are predictable, the letter reveals a few noteworthy details. From a report: For example, when asked to identify the total revenue that it has derived from repair services since 2009, Apple said "the costs of providing repair services has exceeded the revenue generated by repairs" in each year over that period.
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Apple Tells Congress It Hasn't Been Profiting From Repairs in Response To Antitrust Probe More

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

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  • If it's not a profit center (Score:5, Interesting)

    by fredrated ( 639554 ) on Wednesday November 20, 2019 @12:20PM (#59435278) Journal

    then why won't you let others do it?

    • Re:If it's not a profit center (Score:5, Insightful)

      by ArhcAngel ( 247594 ) on Wednesday November 20, 2019 @12:37PM (#59435352)
      They don't make money off of repairs...full stop
      Thus they make getting repairs as hard as possible to maximize new sales over repairs.
      • Comment removed based on user account deletion
        • I have a feeling you are being sarcastic, but is that not what Apple already does with iPhones and iPads, at least the low grade models?

          • Packing the innards full of resin reduces the thermal cooling capability of the chips. It's a big problem, and the reason why it isn't done often. Other than the cooling problem, epoxy resin boosts the durability of most electronics, and makes them much harder to reverse engineer. Both of which are usually advantages.

            Apple is simply gluing together it's products, which is different. It just makes things really tough to disassemble safely. It doesn't improve durability, and is much less effective at pr

    • Re: (Score:2)

      by leonbev ( 111395 )

      Well... it might be a bit more profitable if they Apple "Geniuses" actually knew how to make board repairs instead of replacing the entire system board for simple problems with a single chip on the board.

      They don't seem to know how to do that, and they seem to try to prevent third party repair services from learning how to make those repairs as well by not offering schematics.

    • Re: (Score:2)

      by jimbo ( 1370 )

      They will. Apple announced a few months ago they will allow independent shops access to official Apple parts.

      "To better meet our customers' needs, we're making it easier for independent providers across the US to tap into the same resources as our Apple Authorized Service Provider network, Jeff Williams, Apple COO, via 'Inc.'."

      In addition, Apple will allow third party shops access to training materials that will prepare them for out-of-warranty services.

      Apple's condition is that at least one technician comp

      • It has yet to be seen what official parts and materials independent shops will be allowed to acquire or what agreements or restrictions will be required to do so.
        Apple will probably just let these shops do what is done in store---i.e. expensive board swap or tell you to buy another one.

    • 1) In the case of warranty repairs you want a 3rd party to do it for free? I can only image what drag down profits in their repair centers is warranty repairs. 2) You can get your Apple products repaired at other places but they may not be authorized centers so you could void your warranty. There are many parts that Apple makes difficult if not impossible to repair. That doesn’t not mean Apple prevents others from attempting repairs.

    • I'm sure the license Apple sells Apple Repair (or whatever the subsidiary is named) for the exclusive right to repair Apple products is quite horrendously expensive - and thus they can truthfully say they're losing money on repairs.

  • So it costs them money to repair (Score:3, Funny)

    by anonymouscoward52236 ( 6163996 ) on Wednesday November 20, 2019 @12:21PM (#59435280)
    1) Short AAPL
    2) Send in millions of Apple products for repair
    3) Profit!!!

    (Not actual stock advice, anyone following this advice is an idiot.)

  • Cough, bull shit (Score:2, Interesting)

    by pgmrdlm ( 1642279 )
    And no, I do not think Apple is any worse then any other electronic phone manufacturer. They are all profiting from repairs.

    • Re:Cough, bull shit (Score:5, Insightful)

      by spun ( 1352 ) <loverevolutionary&yahoo,com> on Wednesday November 20, 2019 @01:01PM (#59435460) Journal

      No, they are not profiting off of repairs. Not because they are incapable of profiting off of repairs if set up correctly, but because they make MORE profit off of new sales. That's why they don't want anyone to perform repairs. They would much rather people throw away damaged devices and buy new ones.

      • Re: (Score:2)

        by irving47 ( 73147 )

        They're probably doing some weird accounting process where they take the money (whether gross or net) and compare it to the profit they would have made against selling a new computer to the customer in question, and then call it a "loss". I wonder how their balance sheets show it, and I wonder if it's illegal anywhere. (state laws in the US or other countries)

        • No I just think they don’t separate out warranty repairs with other repairs. From what I can tell Apple repairs will cost more than 3rd party even Apple authorized 3rd parties. So almost no one uses Apple if they have to pay for the repair themselves. If it’s under warranty, they’ll use Apple for sure or an authorized 3rd party (which Apple has to reimburse)

    • Re: (Score:2)

      by Guspaz ( 556486 )

      I believe them... because their method of doing repairs is to simply replace most or all of the device for free if under warranty or a steeply discounted price if not. It's an incredibly inefficient way of doing repairs as opposed to component-level repair, but it's certainly the simplest way.

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      I wonder if they are including all the warranty on their costs.

      Think about how much it must cost to fix a butterfly keyboard. The whole top part of the case and everything glued/riveted to it needs to be swapped out.

      Or iPhone battery replacement. There is a lot of labour that goes into it.

      • Also add to that most repairs a Service Center will perform will be warranty repairs as I see few consumers willing to pay what Apple wants to charge for other repairs.
    • That’s not what they said. Apple said that overall they do not get profits from their repair centers. They didn’t say every single repair cost them money. I can imagine the if the vast majority of their repairs are under warranty, that isn’t profitable.

    • Re: (Score:2)

      by HiThere ( 15173 )

      The "Apple repair centers" I've seen are embedded in a store that sells Apple products. Even if it's a cost center, it's profitable as advertising to get folks into the store.

  • Highly unlikely (Score:5, Informative)

    by Zappy ( 7013 ) on Wednesday November 20, 2019 @12:24PM (#59435294) Homepage

    Well, movie studio's van prove highly successful movies were loosing money so Apple can prove the're loosing money on repairs.
    Just so long it's just numbers on a page anything is possible.

    • Re: (Score:2)

      by JBMcB ( 73720 )

      Well, movie studio's van prove highly successful movies were loosing money so Apple can prove the're loosing money on repairs.

      Movie studios do it by creating a shell company that absorbs any losses and pays the movie studio to produce the movie. How would you do this for a repair?

      • One division/shell company makes the parts in china, and sells to the repair division.

      • Itâ(TM)s very easy to do. They can do things like include most of the cost of an Apple store as part of the expenses for repair. âoeWe wouldnâ(TM)t need to rent such a large Apple store and hire so many Genius bar people if we didnt do repairs.â They can also include some of the manufacturing costs as repair related expenses. For example, when they go to Shanghai to visit suppliers this can be included as repair related expenses because they have to negotiate production related to spare

  • Really suspect. (Score:2, Informative)

    by tysonedwards ( 969693 )
    Even if they offered actual numbers and accounting records, this is really suspect. After all, the part prices they charge to authorized repair companies - and which flow through to customers - is well in excess of the cost of said parts assembled. Even accounting for time, it is difficult to justify a $600 cost to replace the rear glass when one can buy an official full case with back glass replacement for $225 - but where it is not an authorized service if the existing back glass is broken.

    • The only way they could manage this accounting lie is if they don't apportion AppleCare to its various related cost centers.

      The amount of money they make on AppleCare is likely quite extreme, the only way they aren't making money on repairs is if they aren't distributing the revenues of that plan among the cost centers. There's a reason every brick and mortar store offers pay extended warranties for everything under the sun.

    • I think Apple's full of the proverbial here, but I will point out that the cost of a part is more than the cost of manufacturing it. Spare parts have additional costs such as: inidividual packaging, storage (warehouses/distribution centres aren't free), transport and handling.

      I'm sure that Apple, as does Sony, will be inflating their costs here using Hollywood Accounting techniques.

  • A complete circus (Score:5, Interesting)

    by SirAstral ( 1349985 ) on Wednesday November 20, 2019 @12:29PM (#59435316)

    This is an obvious lie, and Apple is going to make Congress look like fools, and Congress is going to do nothing about it.

    Louis Rossman has a litany of video's about this subject that makes Apple looks like a dirty lying villain. It's amazing the double standards that apple fanboi's have to hold to like Apple.

    • Well Apple's response to a repair is, you need this $1900 motherboard plus labor to repair your $2000 Macbook. Louis' response to a repair is, you need this $5 chip and $0.03 capacitor plus labor to fix your Macbook.

    • "Mr Apple Representative, I have a sworn statement from SirAstral, of Slashdot, saying that you are not only lying, but obviously lying. Due to this, I am going to hold you in contempt!"

      That'd go over great.

    • Re: (Score:2)

      by irving47 ( 73147 )

      Please. There are hordes of long-time "Never PC'ers" Mac users that would happily curb-stomp a large percentage of Apple's accountants and upper-management, but still prefer the OS and even some of the hardware.

  • They could remedy that by offloading repairs to 3rd parties...

    Just a thought....

  • Great! (Score:3)

    by Opportunist ( 166417 ) on Wednesday November 20, 2019 @12:32PM (#59435336)

    Then it should be in your own interest to have people be able to repair their iPhones, so it's less of a loss to you and more of a gain to them.

    It's just so win-win, thank you for supporting your customers and produce easier repairable phones in the future!

    Because that's what you wanted to say, right, Apple?

  • Simple. (Score:4, Insightful)

    by berryjw ( 1071694 ) on Wednesday November 20, 2019 @12:35PM (#59435342)
    They are, almost certainly, operating at a loss in the repair department. Payroll likely exceeds revenue by a reasonable amount. The parts department, however...
  • ...for "costs" vs. "revenue". Lots of ways companies can shift things around with this and other areas of the company to make one sector look better or worse than it actually is.

  • It's the not the repairs that are profitable (Score:5, Insightful)

    by DrXym ( 126579 ) on Wednesday November 20, 2019 @12:42PM (#59435380)
    It's the fact that users are disincentivized from repairing, even for what should be a trivial repair like replacing a battery. So instead they buy a new phone they could have gotten many more years out of their old one. That's where the profit lies.
    • Lack of user serviceable parts like the battery are an issue, but the bigger issue is that they actively fight and undermine legitimate repair shops that offer these services. They censor their support forums so they can spread misinformation and fail to diagnose hardware faults for proper repair; ultimately the consumer spends more with fraudulent diagnosis/repair options. Same goes for data recovery.
      • Just to clarify this sentence: *ultimately the consumer spends more having been presented with fraudulent diagnosis/repair options by Apple.

  • Driving new sales is where they make money... (Score:5, Interesting)

    by Myrv ( 305480 ) on Wednesday November 20, 2019 @12:48PM (#59435402)

    It's not if they make money off of repairs. It's that they make the repair process so difficult that people don't bother and just replace their phone/computer with a new one. That's where they make their money.

  • They've said that repairs are operating at a loss. Buy a share of Apple stock, so you have standing, calculate the amount your share of stock has lost due to this horrible business decision, and start a suit to persuade the company to divest itself of this money-losing operation. Or you could float a shareholder resolution.

    But the bottom line is that Apple isn't doing this just to be dicks. Apple has always prided itself on simplicity of ownership and lower TCOs for their devices (determining whether or not

    • Buy a share of Apple stock, so you have standing, calculate the amount your share of stock has lost due to this horrible business decision, and start a suit to persuade the company to divest itself of this money-losing operation. Or you could float a shareholder resolution.

      Have you done this? If so, with what company and what issue?

    • That relies on your expectation that every single part of Apple (or any company) to be a profit center. That is not realistic.

  • After reading the Apple letter they definitely dodged a couple. The one mentioned in the /. post leaves me wondering if Apple included recalls and warranty extensions into their cost column. They are repairs, but they do not reflect accurately whether Apple makes a profit on repairs. I would have like to see a bit more granularity, because I think Apple does make a profit on non-warranty repairs. I also wonder if they include the price of the AppleCare plans in the repair income column, If they did not c

    • Thus is the question and answer:

      For each year since 2009, please identify the total revenue that Apple derived from repair services.
       For each year since 2009, the costs of providing repair services has exceeded the revenue generated by repairs.

      Yes the question was not specific. And the answer is probably accurate if warranty repairs are not separated out.

  • Remember that Apple made the stupid decision to assemble/glue together the upper lower frame of the MacBooks since the introduction of the butterfly keyboard. Any repair to the keyboard, speakers or battery required replacing that whole assembly. If they keyboard is at fault, at no charge even if it's out of warranty (and will still be for a number of years).

    I haven't read any tear-down of the new 16" MacBook Pro but I'm not sure they learned from that costly mistake (of glueing the keyboard, speakers and b

  • I had a battery replaced by a third party provider. After that Apple refused to honor anything about the phone (iPhone 6 touch disease; known manufacturing defect and only Apple has the repair part) and insisted I buy a new phone as my only option. If it weren't for the rude Apple store manager who treated me like shit with a smug attitude, I would have bought the new iPhone.

    Apple's repair policy is designed to force you to buy a new device because they design very expensive disposable products.

    I'm an A

    • After that Apple refused to honor anything about the phone (iPhone 6 touch disease; known manufacturing defect and only Apple has the repair part) and insisted I buy a new phone as my only option.

      In violation of the law. Only damage caused by the actual 3rd party repair is legally exempted from warranty. The problem is that they'll fight you on it first.

      According to the Mag-Moss Warranty Act:

      No warrantor of a consumer product may condition his written or implied warranty of such product on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or

      • That applies to full warranties I believe. It does not apply to limited warranties (which is the Apple iPhone warranty).

        • No - tying arrangements are illegal under both.

          • Please cite that part

            • How does one cite case law? With hours of discovery? I'm not your lawyer. I'm not one at all. But I do know it from previous readings of case rulings (or at least the news articles about those). John Deere only offers limited warranties on their DRM-locked tractors. Start there.

              • You said Magnuson Moss Act said it was illegal. I asked for the part of the Act that says that. I suspect it does not. But let’s cut to the crux: yes your manufacturer can under circumstances void your warranty if you had repairs done by a 3rd party. The FTC says so. [ftc.gov] What the Magnuson-Moss act says is that a warranty cannot be voided simply because you used 3rd party parts or 3rd party labor. The key word is “simply”. However it does not exempt all 3rd party part or labor. If the part did

                • That doesn't say they can void your warranty. It says that damage caused by third party repair can be excluded from the warranty (or demand specific parts used if they are given freely).

    • I had a battery replaced by a third party provider. After that Apple refused to honor anything about the phone [...]

      While I don't disagree with you, this is where you call up a lawyer and sue them under the Magnuson-Moss Act [wikipedia.org].

      • It sure is tempting to lawyer up, but at this stage of my life I have to leave that herculean task to somebody else. In my experience, lawsuits are a soul crushing hassle where only the lawyers win.

        And because they couldn't be responsible for the "fire hazard" of a 3rd party battery I probably would have lost anyway.
      • And your lawyer will probably point out that since your Apple warranty was limited the provisions you cited only apply to full warranties so good luck on suing.

  • Apple shouldnâ(TM)t have to make their product repairable. Repairable means it will have to sacrifice compactness and they will need to make it using giant fisher price plastic thumb screws everywhere so idiots can open it up!

    I am exaggerating but itâ(TM)s true.

  • is more profitable than fixing broken. And it requires less resources to dump the electronic junk in some 3rd world country than to run or keep spare parts inventories.

    Just my 2 cents ;)

  • They're Doing Something Really Wrong (Score:2, Insightful)

    by Anonymous Coward
    Something smells really rotten. If Apple is not making money on repairs then they are doing something REALLY wrong. Louis Rossman has been making good money, in large part, by fixing computers that Apple outright refuses to repair and he often doesn't have direct access to the parts he needs, let alone the wholesale prices that Apple gets for those parts.
  • If the phones that I've taken back to the Apple Store are representative, we got a bargain. There were smashed and water damaged phones that were clearly beyond economical repair, yet they swapped them out for good product at the standard price. The price is way below the build cost.

  • People have to buy a new phone, which is way more profitable than repairs.

  • Comment removed based on user account deletion

  • "I am Jack's smirking revenge..." (Score:3)

    by Pezbian ( 1641885 ) on Wednesday November 20, 2019 @04:02PM (#59436376)

    I can hear Louis Rossmann laughing from halfway across the country.

  • It's hard to profit from something... (Score:5, Interesting)

    by twocows ( 1216842 ) on Wednesday November 20, 2019 @04:53PM (#59436594)
    ... if you refuse to do it. Half the time Apple just refuses to repair the device at all, no matter how trivial the issue is. Then they try to make it so no one else can do it either in order to funnel you into getting a new device. And that is profitable.
  • If Apple is including all repairs done under warranty where there is no actual income them I would believe that the total cost of repairs is greater than the income received for repairs. Apple is currently charging $280 to replace an iPhone X screen, that same screen replacement will only cost you $29 if you have AppleCare coverage. No way Apple is taking a loss on that $280 replacement cost.

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