That Missing iPhone 12 Charging Plug Is Poised To Provide A Boost To One Of Apple’s Hottest Growth Areas
The iPhone 12 ships without a charging plug or wired earphones in the box. That will drive customers to spend extra on plugs and AirPods along with their new iPhone. Deutsche Bank analysts said this week the decision not to include the accessories in the box provides a tailwind for Apple’s “other products” category, which has been growing quickly thanks to AirPods and the Apple Watch.
Your new iPhone 12 comes without a wall plug in the box.
Yes, that’s annoying. And yes, that means you’ll need to drop $19 on a plug that works with the new type of cable that comes with the iPhone 12 to enable faster charging. (Don’t worry, you can still keep your old iPhone’s plug and charging cord and it’ll work with the new iPhone 12.)
Despite Apple’s claim that the absence of the plug was a pro-environment move, it’s on track to see an uptick in its hardware accessories and wearables category thanks to the sale of the plugs and the new ecosystem it’s building around the iPhone 12′s MagSafe charging system.
That category, which includes products such as the Apple Watch, AirPods, chargers and other accessories, has already shown promising growth. Sales jumped nearly 17% to $6.45 billion in Apple’s fiscal third quarter. Apple is scheduled to report its fiscal fourth-quarter results on Oct. 29, but it won’t reflect sales of the iPhone 12 and related products, which went on sale Friday.
Accessories and wearables are following a similar story we’ve seen with Apple’s services business, which includes digital products such as streaming music and iCloud storage. With iPhone sales no longer showing growth, Apple has come up with new digital products to leverage more out of its user base of about 1 billion iPhone users. Apple generated $13.16 billion in services revenue for the fiscal third quarter, up nearly 15% from the year before.
Between the missing plug ($19), missing wired earphones (wireless AirPods start at $159) and the new MagSafe charger ($39) for the iPhone 12, Apple is poised to see a significant boost in accessory sales this quarter. On top of that, Apple has a new $99 version of the HomePod speaker that goes on sale next month and the Apple Watch is cheaper than ever, starting at $199.
Deutsche Bank analysts picked up on that potential growth in a research note earlier this week.
“While [Apple] claims that they are not shipping earphones and a charging cube with the iPhone to save the environment (they are including a charging cord), the reality is that such a decision could drive a financial benefit for the company as well,” the Deutsche Bank analysts wrote.
Looking beyond the near-term sales of the iPhone 12, Apple’s new magnetic charging system, MagSafe, is laying the groundwork for even more accessories for the iPhone. There have long been rumors that Apple’s ultimate goal is to remove the charging port in the iPhone, like it did for the standard headphone jack, which will in turn drive iPhone owners to buy even more extras for their devices.
Maybe Apple is sincere when it says removing standard accessories from the iPhone box is good for the environment. When you’re shipping tens of millions of iPhones per quarter with less packaging and plastic, there’s sure to be a positive impact on the environment. But at that scale, it also drives iPhone customers to buy more high-margin extras from Apple so they can get the most out of their iPhone. And that keeps revenues growing.