consumer technology giant Apple (AAPL -0.63%) just launched the iPhone 14 product line. You know the drill, right? The processor is faster, the cameras are a bit nicer, and the new device offers some features that weren’t available last year.
In particular, the iPhone 14 comes with an unexpected and very welcome improvement that could make the iPhone some Android users dyed in the wool. However, Apple didn’t even mention this revolutionary update at its launch event.
Even again, it makes sense that Apple would want to control this major redesign. The company has strong business reasons for doing so. Let me explain.
Apple’s easy-to-use secret
Apple is known for its stingy limitation of home repairs.
iPhones and iPads are held together with special screws and curmudgeon glue. When you manage to replace the cracked iPhone 13 screen on your own, you will discover that the phone has lost its automatic brightness and ambient light settings. The only way to keep those features intact is to pay through the nose for an authorized repair by Apple technicians, who can use a special connector to update the display’s expected serial number.
However, the recently introduced iPhone 14 series made some radical design changes that make it much easier to repair than any iPhone released in the last six years. Enthusiasts and independent phone repair companies like iFixit and Zack Nelson (JerryRigEverything) agree this update is a game changer. Both the screen and the back panel are relatively easy to remove, making it a breeze to handle common phone repairs. That includes replacing a cracked screen or all-glass back panel, and you no longer have to take everything apart to replace a scratched camera lens.
“These changes to iPhone will help it last longer and reduce its overall impact on the planet,” iFixit noted. “Hopefully, it will inspire other manufacturers to follow suit.”
In Zack Nelson’s iPhone 14 teardown, he said the parts that break most often are easy to fix on the iPhone 14. “I think the screen and back glass on the iPhone 14 are now even more repairable than on the iPhone 14.” most Android phones, which is something I never thought I’d say.”
Note that this was not a minor redesign, it is a complete reorganization of the internal design of the iPhone. Every component within the iPhone has been moved to accommodate the new frame structure.
Why Apple isn’t hitting the table with this big update
This is arguably the most user-friendly change to the iPhone platform in years, but Apple is keeping quiet about it. This is how the iFixit team describes the situation:
All of our, and yours, work has paid off. Our defense, lobbying, shouting in the streets. We’ve convinced the Apple design team that repairability matters. Now we need your help to convince their marketing team to talk about it.
Here’s the deal. Apple would market the living daylights of the iPhone 14’s excellent repairability if it wanted to steal customers from the Android system’s target audience. However, that is not exactly the idea. Some Android users are more price conscious than the almost fanatical Apple enthusiasts. Cupertino has no interest in generating additional sales if it also needs to lower the price.
That’s especially true in this era of limited semiconductor supplies. Apple can now sell as many iPhones as it can make. There’s no need to cut iPhone profit margins in this market.
The company could also argue that a phone that is easily repaired can stay in your pocket longer. Apple would still love to see you buy a new iPhone as often as possible, preferably every year. Why extend the useful life of a highly profitable product?
Apple is not yet opening the door to home repairs or alternative repair shops. Replacing your iPhone 14 screen will still remove a couple of useful features due to the lack of a serial number update, even if you’re getting your hands on an authentic screen from the Apple factories.
What’s the big idea?
Instead, it seems that Apple wants to increase the profit margin on full-featured iPhone repairs. The back glass on an iPhone 14 Pro Max can be extremely easy to replace, with a lower risk of botched repairs and shorter service time. However, Apple still charges $549 for that replacement. That’s more than last year’s cost of $399 for the same service on an iPhone 13 Pro Max.
It’s hard to say how important AppleCare’s repair service is to the company’s bottom line. Apple does not break out sales or operating profit for this segment in its financial reports, combining its results with revenue from advertising, digital content and paid services under the services division.
But services are Apple’s second-biggest business category, behind only iPhone sales. It is also the fastest growing part of the company’s business. Anything Apple can do to widen profit margins in this crucial segment should be considered.
Making the iPhone easier to repair is a great example of that idea of increasing profits. Apple is not shy about making massive gains, which explains why many long-term investors love these stocks.
Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Apple. The Motley Fool recommends the following options: $120 long calls in March 2023 at Apple and $130 short calls in March 2023 at Apple. The Motley Fool has a disclosure policy.
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