Leaked memo reveals that Apple is making a big change to a slumping Services business
A memo that Apple disseminated to its retail and customer-support employees has been obtained by Bloomberg and it contains a big change to the AppleCare+ service. Currently, a consumer has up to 60-days after purchasing an Apple device to join the AppleCare+ program. But the memo says that Apple will be extending that deadline to one year in the U.S. and Canada. In the memo, Apple says, “This gives customers another opportunity to protect their device and have access to all the AppleCare+ benefits.”
There is a big caveat according to the memo. The offer is only available to customers who agree to pay for the service in full instead of making monthly payments, or those who pay in installments through their Apple Card credit card. The price of iPhone coverage is about $200 (more if you want to cover theft and loss) and covers two cases of accidental damage every 24 months. A screen replacement that would normally cost hundreds of dollars is only $29. Other accidental damage will be fixed for $99.
Apple CEO Tim Cook has said that the global pandemic has reduced demand for AppleCare+. Giving iPhone buyers a year to decide whether to purchase AppleCare+ could make up for the sales-damping effect of the COVID-19 outbreak. The memo also says that an Apple retail employee will have to check out any device that a customer wants to be covered by AppleCare+ to make sure that a phone isn’t already damaged before getting covered by the plan.
AppleCare+ is part of Apple’s Services unit. The company has had a goal of hitting $50 billion in revenue for this division by fiscal 2020 and after three quarters, Apple’s 2020 Services revenue has hit $39.2 billion. The goal is definitely in sight. Apple’s Services unit includes the App Store, Apple Pay, Apple Music, Apple TV+, Apple News+, Apple Arcade, iCloud, and more. The App Store is forecast to be the division’s largest contributor with analysts expecting $15.8 billion in revenue from the app storefront during fiscal 2020. The second-largest contributor to Apple Services in the current fiscal year will be Google thanks to the $10.9 billion deal that gives it the job of providing iPhone users with a search engine. AppleCare+ is next, expected to bring in $8.8 billion for the fiscal year that ends at the end of September.