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Why Apple is considering price reduction for the iPhone

January 30, 2019 at 19:02
Last Updated on January 30, 2019 at 19:05

Apple CEO, Tim Cook, said the company could lower the iPhone price in some countries.

This is one of the solutions proposed by the company to deal with the phenomenon that some analysts have been warning for a while: the sale of the iPhone is suddenly diminishing.

The latest quarterly results, posted on Tuesday, show that revenue from Apple smartphones fell by 15% over last year.

This is the first time that the benefits the company achieves through the iPhone has been reduced since this device came to the market more than a decade ago.

Total revenue of the company fell by 5% compared to last year and amounted to USD 84,300 million. This is the first quarterly drop in the company since 2016.

Apple has already expected this decline, and warned its investors early this month when it blamed China: "We did not know how to predict the magnitude of economic slowdown, especially in China," Cook said earlier this month. .

Emerging Markets

But the company's CEO has announced this week that high prices for iPhones are a problem for their customers.

He said that the strength of the dollar, which is why its products were relatively expensive, damaged its sales on emerging markets.

Cook also said that the tech giant started this month in January, due to lower prices for smart phones to protect its customers from currency fluctuations.

"What we did in January in some areas and (for) some products was, basically, absorbing partly or completely foreign exchange trends, as compared to last year," he said.

However, Apple's leaders said they expect the company to continue to face new challenges.

Apple predicts revenue for the first three months of this year – up to March 31 – of $ 55,000 million, suggesting a decline of at least 3.4% over the previous year.

"Macroeconomic environment, especially in emerging markets, will continue to be present," said Luca Mestri, Apple's Financial Director.

Apple is not the only company that has this problem. World smart phone deliveries fell by 5% in 2018, according to Canalys, a market research firm.

But Apple's share price fell by a third since October, due to investors' concerns due to lack of customer interest in new iPhone devices.

The golden age of the iPhone may be over. Photo: DAVID PAUL MORRIS / GETTY IMAGES

The golden age of the iPhone may be over. Photo: DAVID PAUL MORRIS / GETTY IMAGES


Fears were gained when the company said it would stop reporting the number of iPhones, iPads and Macs sold each quarter.

However, Apple shares rose by more than 4% on Tuesday. After-hours trading (orders shipped after closure and executed the next day), which proves that the company has stood up more than expected.

Quarterly sales fell by more than 25% over the previous year in the Chinese region, where Apple includes areas such as Hong Kong and Taiwan.

In Europe, this figure was 3%

But in the United States, the company remains strong: sales have risen by almost 5%. Therefore, the price drop for the iPhone would not affect the region.

Revenues from other services also rose by 19%, adding a record $ 10,900 million in that quarter, which ended on December 31.

Cook said he trusts the company, pointing out strong iPad sales, Macs, and services such as Apple Pay.

"Although it was disappointing to lose our sales estimates, we managed to manage Apple in the long run, and the results of this quarter show that the strength of our business is deep and broad," he said.

Apple stocks have been falling for months now. Photo: GETTY IMAGES

Apple stocks have been falling for months now. Photo: GETTY IMAGES

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