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Why Apple Considers Cutting iPhone Prices

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

Apple CEO Tim Cook said the company may cut iPhone prices in some countries.

This is one of the solutions that the company offers to solve a problem that some analysts have long been warning about: iPhone sales are plummeting.

The latest economic results of the last quarter, announced on Tuesday, show that revenues from Apple smartphones fell by 15% compared with last year.

For the first time, the benefits that the company gets from the iPhone have been diminished since this device appeared on the market more than ten years ago.

In general, the company's revenue decreased by 5% compared with last year and amounted to 84,300 million US dollars. This is the company's first quarterly decline since 2016.

Apple was already expecting this fall, so he warned its investors earlier this month in which he blamed China: “We did not know how to predict the magnitude of the economic downturn, especially in China,” Cook said earlier this month. ,

Developing markets

But the director of the company this time stated that high prices for the iPhone create a problem for its customers.

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

Cook also said that the technology giant began work in January of this year, given the decline in prices for their smartphones to protect their customers from currency fluctuations.

“What we did in January in some areas and (for) some products was mainly absorbed by the partial or full movement of foreign currency compared to last year,” he said.

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

Apple predicts revenue in the first three months of the year – until March 31 – in the amount of 55,000 million US dollars, which implies a fall of at least 3.4% on an annualized basis.

“The macroeconomic environment, especially in emerging markets, will continue,” said Luca Mestri, Apple’s chief financial officer.

Apple is not the only company that has this problem. According to research firm Canalys, global shipments of smartphones in 2018 decreased by 5%.

But since October, Apple's share price has fallen by about a third amid investors' concerns about the lack of interest of buyers in buying new iPhones.

The golden age of the iPhone may be coming to an end. Photo: DAVID PAUL MORRIS / GETTY IMAGES

The golden age of the iPhone may be coming to an end. Photo: DAVID PAUL MORRIS / GETTY IMAGES


The fears intensified when the firm announced that it would stop reporting the number of iPhones, iPads and Macs sold each quarter.

However, Apple shares rose by more than 4% on Tuesday during the so-called after-hour trading (orders shipped after closing and are executed the next day), which proves that the firm resisted more than expected.

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

In Europe, this figure was 3%

But in the United States, the firm remains strong: its sales grew by almost 5%. Thus, the fall in prices on the iPhone will not affect this region.

Revenue from other services also increased by 19%, adding a record of $ 10,900 million in the quarter that ended December 31.

Cook said he was confident in the company, highlighting the high sales of iPads, Mac computers and services such as Apple Pay.

"Despite the disappointment with the loss of sales valuation, we managed Apple in the long run, and the results of this quarter show that the strength of our business is great and broad," he said.

Apple shares fall for months. Photo: GETTY IMAGES

Apple shares fall for months. Photo: GETTY IMAGES

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