Apple's rare apology over iPhone slowdowns targets 'on the fence' upgraders, analyst says

  • Apple's rare apology over iPhone slowdowns targets consumers "on the fence" about upgrading their smartphones, tech analyst Daniel Ives says.
  • The potential upgraders "weren't going to necessarily switch," Ives says, "but the last thing they needed right here was a deterrent to get them to upgrade."

Apple's rare apology over iPhone slowdowns targets consumers "on the fence" about upgrading their smartphones, tech analyst Daniel Ives told CNBC on Friday.

The tech giant issued an apology Thursday over the revelation that its software slows down older phones to protect battery stability. Apple will cut the price of replacing an out-of-warranty battery to $29 from $79.

Apple addressed outrage about its products at a time when it is charging $999 for its newest flagship smartphone model, the iPhone X.

Ives told "Squawk Box" the apology was a smart move by Apple as 350 million consumers are looking to upgrade over the next year and the company needed to lock in "on the fence" buyers.

"This was a PR nightmare and this is something they needed to stop head-on," said Ives, chief strategy officer at GBH Insights. "They're going into their biggest product cycle potentially ever. ... They're going through a pivotal time and this was the last thing they needed."

The potential upgraders "weren't going to necessarily switch," Ives said, "but the last thing they needed right here was a deterrent to get them to upgrade."

The apology "was easy to do. They need to do it," he said. "There was a bit of a misunderstanding and that's why they needed to address this with a statement."

Apple will go into 2018 with a little tail wind, Ives predicted. But he expects significant upgrades that will continue through March and even into the summer.

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