Why Apple should cut adapter prices

In response to a fatal incident involving a non-Apple [AAPL] iPhone power adapter, Apple has begun to do the right thing by offering lower cost adapters to some consumers -- but has the company really gone as far as it should to prevent this problem?

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[ABOVE: Apple announces its adapter scheme.]

Quick response

Apple isn't the only smartphone manufacturer that needs to deal with this. Only last month Samsung managed to avoid any hint of global media comment when a Galaxy S4 exploded and destroyed a man's Hong Kong apartment. You don't have to dig to far to find other incidents in which the batteries inside portable devices have caught fire.

The incident that prompted Apple to offer US and Chinese consumers its USB Power Adapter Takeback Program saw the tragic death of a young Chinese woman who was electrocuted when using an unauthorized power adapter with her iPhone.

Apple's response is to discount the cost of a single Power Adapter for each of a consumer's iPhones, iPads or iPods by c.50 percent, in the event the consumer also returns an Apple or third party adapter.

"Recent reports have suggested that some counterfeit and third party adapters may not be designed properly and could result in safety issues. While not all third party adapters have an issue, we are announcing a USB Power Adapter Takeback Program to enable customers to acquire properly designed adapters," the company said, announcing the scheme.

"Customer safety is a top priority at Apple. That’s why all of our products — including USB power adapters for iPhone, iPad, and iPod — undergo rigorous testing for safety and reliability and are designed to meet government safety standards around the world."

It is great that Apple has commenced its scheme just a few days since the tragic death of its Chinese customer. The speed and manner of its response is yet more evidence that this firm tries to act as a corporately responsible citizen. Where others prefer to lay low and hope the mud doesn't stick, Apple has instead launched a major initiative to help put things right. That's great, but the company hasn't (yet) gone far enough.

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[ABOVE: Put simply, price is what drives sales of dodgy adapters.]

A better response

There's one primary reason people choose to purchase cheap power adapters for Apple devices from unapproved manufacturers: Price.

Apple's new scheme (sadly only available in the US and China) extends between August 16 and October 18 -- but I think it's pretty clear the company should consider a permanent price cut on these things.

Power adapters get broken relatively easily; they get lost; they get stolen; they wear out.

I respect that Apple is a business. I understand that the strong mark-ups it applies to its cables and peripherals help the firm maintain its high profit margins. I recognize AAPL stockholders will slam any actions that dent margins. I get that there's a need to maintain business profitability. I understand the capitalist construct.

However, I also recognize that high margins on Apple peripherals are precisely why a third party industry for unapproved solutions exists.

Apple's official price for these things is $19 in the US (reduced to $10 under the deal). That's not a lot of cash to some, but it's clearly too much for many -- it's possible to pick up an unofficial adapter for as little as a couple of dollars on ebay.

An inconvenient truth

The inconvenient truth is that if a third party firm can manufacture power adapters at a fraction of the cost of official Apple versions, then it must also be possible for global multinational such as Apple to offer its own for less.

Inevitably, stringent health, safety and testing requirements would likely mean Apple's official chargers would remain a little more expensive than those available from unapproved manufacturers, but a move to discount prices permanently would inevitably drive some of those cowboys out of the frame.

An international price reduction in official adapters would also reinforce Apple's attempt to cast itself as a responsible firm that cares about its people.

That price cut can't come soon enough. 

**ADDITION: Particularly in light of this interesting teardown analysis which estimates these things cost Apple under $10 to make.**

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