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Why Apple is Thinking About Reducing iPhone Prices

January 30, 2019 07:02
Updated on January 30, 2019 19:05

Apple CEO Tim Cooke said the company could lower iPhone prices in some countries.

This is one of the solutions the company proposes to tackle the phenomenon that some analysts have already warned for a while: iPhone sales are declining.

Recent economic results from the latest quarter, released on Tuesday, show that Apple's smartphone revenue dropped 15 percent compared to last year.

This is the first time the benefits the company receives through the iPhone to reduce, as this device came out on the market more than a decade ago.

In total, the company's revenue declined by 5% compared to last year and amounted to US $ 84,300 million. It is the first quarterly decline of the company since 2016.

Apple is already expecting that decline, so he issued a warning earlier this month to his investors, accusing China of "We do not know how to predict the size of the economic slowdown, especially in China," Cook said earlier this month. .

New markets

But the company's director this time declared that the high prices of iPhone pose a problem for their customers.

He said the strength of the dollar, which makes its products relatively more expensive, has damaged sales in emerging markets.

Cook also said the tech giant started this January, in light of a reduction in the price of its smartphones to protect its customers from currency fluctuations.

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

However, Apple executives said they expect the firm to continue to face new challenges.

Apple forecast revenues for the first three months of the year – up to March 31 – from $ 55,000m, indicating a decline of at least 3.4 per cent annually.

"The macroeconomic environment, especially in emerging markets, will continue to be there," said Luca Mestre, Apple's CFO.

Apple is not the only company that has this problem. According to Canalys, a market research firm, smartphone shipments around the world were down 5% in 2018.

But Apple's stock price has fallen by about a third since October, amid concerns the investors have about the lack of interest by buyers for the purchase of new iPhones.

The golden age of the iPhone can come to an end. Photo: DAVID PAUL MORRIS / HETTI IMAGES

The golden age of the iPhone can come to an end. Photo: DAVID PAUL MORRIS / HETTI IMAGES


Fears were intensified when the firm said it would stop reporting on the number of iPhones, iPads and Macs sold every quarter.

However, Apple's shares have grown by more than 4 percent over the so-called " "after-hour" trading (orders sent after the end and executed the next day), which proves that the firm has opposed the more than expected.

Quarter sales fell more than 25% last year in the region of China, where Apple includes areas such as Hong Kong and Taiwan.

In Europe, that figure was 3%,

But in the United States the firm remains strong: sales have increased by almost 5%. Therefore, the decline in iPhone prices will not affect that region.

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

Cook said he had confidence in the company, noting strong sales of iPad, Macs and services like Apple Pay.

"Although it was disappointing to lose our sales estimates, we managed to keep 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 fall for months. Photo: GETTY IMAGES

Apple stocks fall for months. Photo: GETTY IMAGES

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