Why Apple Inc.'s USB Takeback Program Is a Self-Serving Sales Stunt

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Nearly a month after expressing condolences to the family of a 23-year-old Chinese woman who was electrocuted while answering her iPhone 5 while it was plugged into a third-party adapter, Apple ( AAPL ) is now following up with a "special" deal for its customers.

Citing serious concerns about the potential dangers of generic USB power adapters to both people and the devices to which they're plugged in, Cupertino has launched a global takeback program that will allow owners of such iPhone, iPad, and iPod adapters to swap them out for official Apple versions. For just over two months beginning August 16, not only will Apple replace customers' knock-off chargers with ones the company can guarantee have been subject to its rigorous testing for safety and reliability, but it will dispose of the old adapters in an eco-responsible manner.

Apple is providing this superior product and environmentally friendly service for the special price of $10 -- and all in the interest of the safety of its customers. How responsible. How beneficent. How -- wait, ten bucks? Is that actually a deal? How much does this thing normally cost?

Try nearly double. In the interest of keeping its iPhone faithful free of electric shock, Apple is practically giving away this one-inch plastic cube at just half of what it normally charges ( $19 ) -- and thus settling for a slightly less egregious markup.

Though we don't know the exact breakdown of production costs for the charger alone, its key and most expensive component by far, the flyback transformer, runs $1.36 -- and probably even lower. When the 30-pin to USB cable ( also $19 ) is added to the set, the estimated bill of all the materials is around $4.66. Yet Apple gets away with a retail total of $38 for both the cable and adapter.

Now the question becomes, "Do we get what we pay for?" Well, let's take a look at the product reviews . The customers in Apple's online store have given the new generation charger an average three-star (out of five) rating. Despite tech bloggers' assertions that the iOS charger is a high-quality accessory -- with design elements that reduce interference with the touchscreen and audio playback, for example -- its customers seem to find its performance lukewarm at best.

Of course, if the product was truly exceptional, it probably wouldn't need replacing in the first place.

For price comparison's sake, Samsung (OTCMKTS:SSNLF) makes a similar cube charger that contains only about a dollar less in guts than its Cupertino competitor, but this one is up for grabs on Amazon ( AMZN ) for a drop in the bucket at five and a quarter.

There's a reason Apple consumers are turning to counterfeit accessories: They're a helluva lot cheaper. A UL-listed, third-party iOS USB adaptor (albeit lower quality) can be had online for less than $3 -- including tax and shipping. At this price, people can afford to have their replacement devices go defective ten times over.

Apple's takeback program isn't a gift to consumers but a cheap tactic to increase its own bottom line. Customers are being urged to ditch their largely safe counterfeit adaptors while getting duped into dropping $10 on a discounted, yet still-insanely overpriced, "official" one.

If Apple really wants to do its customers a solid, the company would join Samsung, LG (OTCMKTS:LGEAF), Motorola ( GOOG ), HTC (TPE:2498), Windows ( MSFT ) phones, and even recently released BlackBerrys ( BBRY ), drop its proprietary format and make its accessories universally micro USB compatible.

Also see:

Intel, Qualcomm, Samsung, NVIDIA: Who's the Fastest of Them All?

Update: Obama Turns Down an Apple Product Ban at the Last Minute

Google Inc. Cracked the Code Before Apple Could

Disclosure: Minyanville Studios, a division of Minyanville Media, has a business relationship with BlackBerry.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks , Technology

Referenced Stocks: AAPL , AMZN , BBRY , GOOG , MSFT

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