Right to Repair will leave income gap for big tech
- The Right to Repair Act affects EU phones from 2027.
- Ecodesign legislation in effect 2025.
While only a few of us change out our phones for a new model each year, most smartphone users look at replacements at or around the two- to three-year mark. That watershed is partly driven by many Android models ceasing to receive updates at three years (the exception here is Samsung, which pushes updates for its phones for four years).
For Apple iPhone users, however, the viability of their devices is typically slightly longer, although the company has been accused of pushing updates that deliberately limit performance on older phones to increase the battery’s lifespan.
Apart from broken screens, the usual point of failure on the modern smartphone is the battery, with older models sometimes not making it through a full day of average use. At that point, users begin to look around at the latest deals. The right to repair most modern smartphones isn’t an option.
Therefore, business fleets of phones will be set to a relatively brisk cadence, with decision-makers aware of the potential impact on employees who operate under-performing phones or phones that run out of juice by mid-afternoon.
Recent EU laws endorsed at the end of June this year now mandate that phone manufacturers produce phones that allow a “layman” to “easily remove and replace” the battery. Other industries are affected, too – the legislation also places stipulations on car battery manufacturers, for example. The Right to Repair legislation comes into effect in 2027, and will be preceded by “ecodesign” legislation, in force in 2025, designed to ensure phones and tablets are re-usable, user-maintainable and upgrade-able.
What are the effects of Right to Repair?
There will be debate, no doubt, on the definitions of many of the terms so carefully chosen in the legislation. And that’s before the issue of waterproof phones needing to be sealed against liquid ingress is tackled. Terms like ‘waterproof’ and ‘easily repairable by a layperson’ will form the basis of many lawyers’ income in the next few years, but the direction that the EU is taking is undeniable.
The large phone manufacturers’ economies of scale will probably mean that any new designs of devices will go worldwide, irrespective of local legislation. It’s difficult to see, for example, one set of iPhones made for Europe, and another for the US and parts of the APAC, for example.
If phone manufacturers can make their products longer-lasting, they’ll (as it stands at present) be exempt from the law applying to them. Phones must maintain 83% of their capacity after 500 cycles and 80% after 1000 cycles to escape the need for replaceable batteries.It’s likely that device manufacturers will ensure that their devices’ batteries last longer, but it’s worth noting that laws are iterative: any strictures implemented will change over time. It’s not difficult to see the laws tightening, therefore, to promote even longer life cycles.
Some design changes are inevitable, and fewer smartphones will go to landfill, which is the primary aim of both rafts of legislation (more than 150 million smartphones are thrown away yearly).
But with longer lifespans, phone and tablet sales may fall. For manufacturers, that’s a significant threat to revenues. Apple, for example, sold 225 million phones in 2022, creating more than 52% of the company’s annual income. Assuming a relatively modest slowing in end-users’ needs to refresh their phones (say, waiting four years instead of three), the potential drop in sales could cost every manufacturer around 30% of annual sales on new models.
Large technology companies and their shareholders are not known for taking large drops in income on the chin and moving on. It’s interesting to speculate, therefore, where the costs of Right to Repair will be recouped. The obvious options are higher device and spare part prices (especially batteries) at the point of purchase.
There is an outside possibility that Apple et al. will drive repeat sales and a faster refresh rate by adding must-have features to new models. What these might be, however, is difficult to imagine: the top uses of a smartphone (apps, photos, gaming, music, video, etc.) are all pretty much covered, and there have been no must-have smartphone features offering a USP for a generation.
Phone manufacturers will look to other sources of income to fill any holes in their balance sheets. For Google and Apple, which make both hardware and software, a significant resource is the value of users’ data. Apple’s current policies on privacy make up a large part of its marketing, so monetizing its Health App data, for instance, seems unlikely as it would be PR suicide.
Companies with broad stables of other hardware (such as Samsung) could raise prices on any number of other goods and services as compensation, but the smaller, specialist phone manufacturers may struggle to compete with enforced high ticket prices on their new phones.
However, some smaller phone producers, like Fairphone, for example, will be unaffected; it was one of the first to fill the niche of a repairable and recyclable phone.
Software developers and the developers of iOS and Android will have to ensure that their apps and services run happily on older devices. In ten years, the Play and App Stores will have to offer backward compatibility with OSes and hardware coming out about now. If they don’t, competing apps will.
Companies are already moving towards a more circular economy in batteries and repair, albeit often grudgingly. With 2023 past its halfway point, and the first tranche of EU legislation set to land in 2025, there’s little time left for hardware and software companies to react meaningfully.
22 February 2024
21 February 2024
21 February 2024