How Can Apple Afford To Replace A Smashed iPhone 5 For Just $229?

smashed iphoneNot the iPhone that I smashed

Well, it finally happened.After four years of owing an iPhone, I shattered the screen for the first time.

It fell out of my jacket pocket as I started to ascend the Manhattan Bridge on my bike. One second I’m listening to a podcast, the next second, the only sound I hear is the thwack of my two-month old iPhone 5 hitting the ground.

Adding insult to injury, when a fellow biker who was trailing me picked up the phone and handed it to me, I pricked my finger on the broken glass.

The rest of my bike ride home I was bummed. I just kept thinking about how I was going to have to shell out $650 for a new phone. (I don’t have Apple Care.)

When you buy a new iPhone for $200, the carrier sends another ~$450 to Apple. The carrier recoups the money through overpriced voice and data plans.

I was led to believe that buying a new phone meant saying goodbye to that $450 subsidy and I would have to cover the whole thing on my own.

Beyond the cost, I was also worried I couldn’t get a new phone for days or weeks. Analysts have been saying iPhone 5 supplies have improved, but still, I had my doubts.

When I got home I spent 30 seconds looking at my broken iPhone screen and trying to convince myself I could live with it. I set up a Genius Bar appointment for that night. If I was going to spend $600 on a phone, might as well get it over with.

I arrived at the Apple store at 8 PM. It was packed. There was a Justin Bieber clone playing music at the store.

My appointment wasn’t for another 20 minutes. I read Twitter through my cracked screen, being careful not to slice my finger open as I swiped.

My Genius was ready after just five minutes. I explained what was wrong with the phone.

He said, no problem, we can give you a new phone. It will be $229.

Wait, what?

Yes, $229 for a brand new 32 GB Verizon iPhone 5 in black.

But, what?

Well, we have phones that are designed just for instances like this. There is no packaging, no headphones, no charging cord.

Surely those things don’t cost $400.  Is it refurbished?



I walked out of the store with a brand new phone.

I was relieved, but stumped.

How can Apple charge ~$650 for a brand new phone, but only $229 for a replacement phone?

Does anyone know?

My best guess is that Apple refurbishes the phone, replacing the broken screen and resells it for $400-$500.

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