【Watch Climax Online】

The Watch Climax Onlinefuture of Apple is uncertain now that iPhone sales are flat, and it's not clear what the company's next big act will be or when it will arrive.

Tim Cook partially blamed lower than expected revenue projections on a number of factors including challenges entering the Chinese market (no doubt exacerbated by the escalating trade war between the U.S. and China), rising device prices, and an unexpected uptick in iPhone battery replacements made attractive by a special $29 promotional price all last year after the company was caught slowing down performance for older devices.

Just how many people took advantage of the battery replacement instead of buying new iPhones? According to Daring Fireball's John Gruber, the company replaced 11 million batteries. That's 11 million people who could have bought a new iPhone, but chose not to.

Should Apple expect more battery replacements in the future as the new norm? Maybe, but it's nothing to be alarmed about.

SEE ALSO: It's official: iPhones are too expensive

Crunching the numbers, 11 million battery replacements times $29 works out to $319 million in revenue.

In contrast, if hypothetically, all 11 million of those users purchased an iPhone XR at the minimum $749 starting price, Apple would have raked in $8.23 billion. And the revenue would've been even higher had these people purchased an iPhone XS at $999, earning Apple at least $10.98 billion.

These numbers are in line with the the $5-9 billion in revenue correction Cook advised in his call with investors.

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Per Gruber, Apple reportedly only expected to replace "1-2 million battery replacements normally," but instead saw a 10x increase.

As is always the case, it's hard to pinpoint exactly how Apple was totally blindsided by an increase in battery replacements. Gruber has a guess, though.

"The effect of the battery replacement program on new iPhone sales wasn’t apparent until after the iPhone XR and XS models were available," says Gruber. "A few million extra iPhone users happy with the performance of their old iPhones with new batteries — who would have otherwise upgraded to a new iPhone this year — put a ding in the bottom line."

What does consumer awareness on battery replacements mean for the future of the iPhone? More lost sales because customers could choose to get a battery replacement (even at $69 for iPhone X and newer and $49 for iPhone 8 Plus and older)?

It'll certainly be something analysts and pundits will watch closely in 2019 and beyond, especially since Apple is no longer reporting unit sales for iPhones.

Apple Music still has a lot of room for growth. Credit: NurPhoto via Getty Images

The reality is: smartphones have plateaued. Yes, new models are have better screens, bigger batteries, faster performance cooler designs (some without notches!) and cost more, but the group of people who need the most cutting-edge technology is diminishing. Phones have been good enough for a while and for most people, they just need it to work. A cheap $50 battery replacement is a drop in the bucket compared to forking out $1,000 for a new iPhone.

At the same time, these changes in the market aren't a sign that phones with user-replaceable batteries will return. No, they're never coming back. Removable batteries have no place in a world where phones are built to such tight tolerances. Hate to burst the bubble on that dream.

Where Apple can make up for a drop in existing iPhone owners buying new iPhones is services. Apple's ecosystem lock-in is the strongest there is with features like iMessage, FaceTime, and Apple Music augmenting the cost of a device.

An iPhone user can be tapped to subscribe to a service such as Apple Music if Apple can provide content that isn't available anywhere else. It would essentially be stealing the Netflix playbook. Additionally, hooking existing users on it services further locks them into Apple's "walled garden" and makes it less attractive to jump ship to another ecosystem such as Android.

Cook's outlook has always been for the long-term and creating a loyal and valued customer that maybe won't buy every new device, but won't switch either. Providing new services such as the rumored video streaming service the company's reportedly building keeps these people in the Apple playpen, which'll make them upgraders down the road. Apple's not just investing in customers today or tomorrow, but trying to make sure it keeps customers for the next five, ten, and more.

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Topics Apple iPhone