How an iPhone Is Like a Tractor
If you’re more hooked into the tech world than the agriculture world, you may not have noticed over the past few years that some of the major farming equipment makers are reserving to themselves the right to do all repairs on the equipment they sell to farmers. Farmers, a notoriously independent and handy bunch, responded by going to their state legislatures and introducing so-called right-to-repair laws that would prohibit the equipment makers from forcing farmers to use only captive repair services.
Apple Inc. (NASDAQ: AAPL) and Samsung follow much the same playbook, requiring smartphone owners to use company-approved service providers that are required to purchase parts, diagnostic tools and software only from the smartphone makers. Meanwhile, there’s a growing chorus of users who want more choices and more competition in the way Apple and other companies across many industries offer repair services.
In 2017, eight states were considering right-to-repair legislation that specifically applied to makers of electronics products and would have required these companies to make parts, diagnostics and repair manuals available to all, not just to authorized repair centers. This year, 14 states are considering legislation to require makers of everything from tractors to smartphones to give owners a right to repair their own stuff.
According to the U.S. Public Interest Research Group (PIRG), Americans could save $330 per family annually if families and communities supported repairing things rather than replacing them. That’s an annual total of $40 billion. U.S. PIRG also notes that about a third of the 14 bills being considered this year target farming equipment.
In an interview, Kevin Kenney, an engineer at Grassroots Energy told how companies like farm equipment maker Deere use extended use license agreements that, Deere and other manufacturers argue, leaves ownership of the equipment with Deere and gives farmers a license to operate the equipment. The farmers must then comply with the manufacturer’s instructions on how to get repairs and updated software.
A farm equipment manufacturer could turn a $600,000 piece of equipment into a pile of expensive junk if the maker decides no longer to support the software in the legacy equipment. By deciding not to allow non-authorized service providers, Apple forces iPhone owners to use its services, and it can charge whatever it wants. A report in The Conversation claims that Apple boosted its repair costs in Australia by 40% for the iPhone 12.
Deere has argued that self-repair of its equipment could be unsafe and violates intellectual property rights. Apple makes similar arguments against unauthorized repair of its iPhones, adding that low-quality parts could jeopardize not only safety but performance and that its devices could be more vulnerable to hackers.
Why this could be a big deal for Apple is that one analyst believes that by September 2024 the company could grow its services revenue to 30% of Apple’s total annual revenue and the profits could equal 45% of the company total. We note that Apple’s services business is more than just repair services, but also includes Appel Music and Apple TV+, among other things.
Apple needs to defend its growing services business or it will pay a heavy price. That means it will have to pay more attention to legislation that could sweep the company’s services businesses up along with the farm equipment makers. So far at least, its defense seems fairly mundane and as more pressure comes on tech firms for anticompetitive behavior, Apple is going to have to come up with stouter reasoning.
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