Apple Powers Up Its Cynical Genius

Jon Markman

Apple ((AAPL) -Get Report) Shares are racing to another new high. The company has a plan to increase profitability during the pandemic. It’s classic Apple.

Reliable analyst Ming-chi Kou, according to Apple Insider, says the Cupertino-based company is not going to include earbuds or a charger in the box, when it releases iPhone 12 later this year.

Apple is planning to increase profit margins by giving customers less.

If that seems anti-consumer, it is. To use the device, iPhone buyers new to the ecosystem will have to buy a charger from Apple. That’s an additional cost of least $20. Ka-ching.

But we’re talking about Apple, a company with notoriously loyal customers, and a rabid cluster of boosters in the press. The decision has already been rationalized as brilliant for the environment.

Verge editors interviewed Steven Yang, the chief executive officer at Anker, a Chinese company that makes external batteries and chargers. If Apple nixes the charger, Anker stands to win big.

The environmental angle, Yang says, is electronics waste. He notes that 300,000 tons of e-waste is generated each year from chargers for phones, laptops, tablets, power drills and more.

I will note that chargers for power drills are hulking and heavy, while iPhone power bricks look more like cute marshmallows. Attributing the bulk of a terrible e-waste problem to smartphone chargers seems like some magical thinking. But that might just be me.

The more important question for investors is does that really help Apple profit margins? Taking away something, while providing no discount, is good for the manufacturer. The genius of Apple as a business is convincing its loyal customers that giving them less is good for them, too.

I have been skeptical of Apple as a business. Recently, I have been too pessimistic. However, if Cupertino can pull off this no-charger scheme, and customers buy in, it opens a lot of doors in the future.

Creating a problem, then offering a solution, for a fee is classic Apple.

The company removed the headphone in 2016. Critics howled with derision. However, that decision laid the groundwork for its now ubiquitous wireless Airpods, a headphone business that may have generated $12 billion in sales during 2019, according to a report at Bloomberg.

Removing the charger opens the door to a wave of expensive upgrades to faster chargers.

Apple stores are already stocking a 30 watt charger compatible with iPhones. The cost to consumers is a cool $49. And don’t forget fast charging wireless mats. They are in the product pipeline, too.

Longer-term investors should sit back and applaud Apple’s cynical genius.