Find out how Apple and other smartphone companies make massive profits on little screens.
HP did it with printers and ink. Gillette did it with razors and blades. And now, Apple and other smartphone manufacturers are doing it with replacement screens.
While not nearly as lucrative, and obviously not intentional, Apple, Samsung, and others are making bank replacing cracked smartphone screens. As of late 2014, Americans spent $23.5 billion replacing broken smartphones, according to SquareTrade data. The cost of replacement phones is increasing too, with SquareTrade estimating the cost of replacements hit $4.8 from 2013 to 2014.
Sometimes, it feels like my family is responsible for most of that sum.
But based on the reactions to a Facebook post, it seems that we're all feeding the smartphone profit machine, and long after we fork out the cash to buy our iPhones or Android devices in the first place.
Over the past few years, I've visited the Apple Store or third-party repair providers to fix what my children have broken... over and over again. (I admit that I cracked my screen once, so I'm also part of the problem.)
At $129 for each repair (without AppleCare), or even more if Apple deems that the underlying touchscreen or other internal systems have been damaged, I estimate that I've spent well over $2,500 fixing cracked iPhone screens.
This equates to a tidy profit of approximately $2,300 for Apple, based on estimates of the cost of materials. Not too shabby. Who wouldn't want 90%-plus profit margins?
This is one reason third-party repair companies have entered the market. As one friend told me, "It's best to avoid the Apple Store for repairs. Other folks do it for a fraction of the price." The problem, however, is that those same "others" void my Apple warranty when they crack open the screen (pun intended).
So, I'm somewhat bound to Apple being expensive when I first buy the phone, and then when I pay to have its screens replaced again... and again... and again.
The cost of an iFix
For those wondering how I arrived at the profit margin estimate, it's admittedly a bit of guesswork. Aside from straight glass screen replacements, Apple didn't tell me exactly what it had to replace (except when it had to completely replace the unit, which has happened a few times).
Of course, Apple isn't morally obligated (or even wise) to sell replacement glass at cost, but it's clear that the company makes a lot of profit on selling $129 replacement screens, which can be done in under five minutes. (Sure, Apple runs a bunch of tests to ensure the integrity of the system, but not $119 worth of tests.)
Other smartphone manufacturers, like Samsung, are the same.
There is some room for hope. According to SquareTrade tests, Apple's newer, larger phones are less susceptible to breaking (though this hasn't stopped my wife and I from proving that these phones still crack without too much encouragement).
This isn't Apple's or Samsung's or anyone else's fault but mine. As my sister told me, "My son's lame feature phone never breaks." So, I'm creating an opportunity for rampant screen cracking simply by purchasing iPhones for kids who are less than super-careful.
Regardless of whose fault, it sure is expensive, and I wouldn't mind getting a bit of a break on the cost of replacing a very cheap piece of glass.
How much money have you wasted--or spent--on replacement screens for your smartphone? Let us know in the discussion thread below.