Apple to lower iPhone pricing in key markets after sluggish December quarter

Posted:
in General Discussion edited January 29
Following the release of Apple's earnings report on Tuesday, CEO Tim Cook revealed the company is planning price changes for iPhones overseas to goose sales of the device after sluggish sales in China and other regions during the important holiday quarter.




In an interview with Reuters, Cook said that he believes the current trade tension between the United States and China has improved, suggesting an exacerbation of a contracting major economy might soon ease.

However, he also said that Apple is rethinking how it prices iPhones overseas after recent economic conditions in other markets. Apple in recent years has set the price of iPhone based on the U.S. dollar, a strategy that results in higher prices in certain regions.

"When you look at foreign currencies and then particularly those markets that weakened over the last year, those [iPhone price] increases were obviously more," Cook said. "And so as we've gotten into January and assessed the macroeconomic condition in some of those markets we've decided to go back to [pricing that is] more commensurate with what our local prices were a year ago in hopes of helping the sales in those areas."

Cook spoke to Reuters as Apple made its legally-required earnings disclosures. He addressed the fact that the iPhone's revenue was affected in particular by economic weakness in China.

Looking ahead, Cook sees a thawing of tensions between the U.S. and China, a situation that Apple said impacted iPhone sales over the trailing half of 2018.

"As we've gotten down in to January," he said. "January looks better than December looked. And I think if you were to graph up trade tension it's clearly less. I'm optimistic that the two countries will be able to work things out."
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Comments

  • Reply 1 of 41
    In other words, we f*cked up by jacking our prices up higher than even we could believe.
    dtb200trashman69anantksundaramtokyojimumuthuk_vanalingamkitatitpropod
  • Reply 2 of 41
    This isn't bad news for Apple - it's bad news for their competitors.

    Apple can afford to make some adjustments to their pricing even if they take a slight hit on margins. The problem is by lowering prices an iPhone becomes an even more attractive alternative to someone looking at a Galaxy S or other flagship. Even a change of 99 dollars (or Euros) has a significant impact on the perceived value of an item. Suddenly an undecided consumer looking at an iPhone vs another device could be swayed to pick the iPhone because of the lowered price.
    lollivermuthuk_vanalingamrepressthiswatto_cobra
  • Reply 3 of 41
    Tim still banging on about subsidies. Yet carriers haven’t been offering so-called subsidies for several years now. Bottom line is the price of iPhones have gone up. A few years ago the flagship iPhone started at $649, now its $999. Subsidies have nothing to do with that. Also Luca basically confirmed iPhone ASP is down YOY.
    edited January 29 designrasdasdelectrosoftberndog80s_Apple_Guymuthuk_vanalingampropodkitatit
  • Reply 4 of 41
    avon b7avon b7 Posts: 3,646member
    This isn't bad news for Apple - it's bad news for their competitors.

    Apple can afford to make some adjustments to their pricing even if they take a slight hit on margins. The problem is by lowering prices an iPhone becomes an even more attractive alternative to someone looking at a Galaxy S or other flagship. Even a change of 99 dollars (or Euros) has a significant impact on the perceived value of an item. Suddenly an undecided consumer looking at an iPhone vs another device could be swayed to pick the iPhone because of the lowered price.
    If you take into account more than three years of flat sales plus this decline, a price adjustment probably wouldn't help to push sales higher than they were last year, or the year before. 

    It would be more like rolling back the clock to how things were before the decline which wasn't showing any signs of growth anyway.

    Better than how things are right now, yes. Better than the last three years, unlikely.

    Apple needs to accompany the price adjustments with a compelling upgrade to the iPhone itself. Perhaps this year, that change will come but September is still a long way off.

    Competing Android manufacturers have been pricing their flagships in the same band as Apple (today) but seeing success, so while price is obviously a factor in Apple's poor results (YoY) it isn't the whole story as the features on offer from rivals simply have more appeal (at every price point below the premium bands too).

    Still, a tacit admission by Apple of setting pricing too high is also the beginning of the solution, so any reductions will be welcome.

    I paid around 650€ for a 64GB XR after trade in and the iPhone 6 battery refund. That seems reasonable. If it hadn't been for the change in trade in value, Apple would have lost the sale to me.

    I wonder how much of an impact that last minute change in policy had on the final numbers, which in spite of them being poor, perhaps could have been far worse.


    muthuk_vanalingamJeff_in_TX
  • Reply 5 of 41
    asdasdasdasd Posts: 5,282member
    “Cook said. "And so as we've gotten into January and assessed the macroeconomic condition in some of those markets we've decided to go back to [pricing that is] more commensurate with what our local prices were”


    Cook ignoring DED’s sage advice again.  
    muthuk_vanalingamrepressthis
  • Reply 6 of 41
    anomeanome Posts: 1,266member
    I hope (but don't really expect) that this includes places like Australia, where changes in the exchange rate have forced the price up. You complain about US$1000 phones? Try A$2000. Sure. after taking into account the exchange rate and sales tax it works out about the same, but there's still a psychological barrier to contend with. Despite being a relatively affluent nation, we aren't that affluent.
    watto_cobra
  • Reply 7 of 41
    @rogifan_new ;
    Tim still banging on about subsidies. Yet carriers haven’t been offering so-called subsidies for several years now. Bottom line is the price of iPhones have gone up. A few years ago the flagship iPhone started at $649, now its $999. Subsidies have nothing to do with that. Also Luca basically confirmed iPhone ASP is down YOY.

    He said "increasingly less common." Do you think he's lying? If you actually listened to the call, he specifically called out markets where this is a more recent change, ie Japan as an example where regulations have changed things. Turns out Apple operates in other markets than the US, who knew?

    "Second, subsidies: For various reasons, iPhone subsidies are becoming increasingly less common. In Japan, for example, iPhone purchases were traditionally subsidized by carriers and bundled with service contracts. Competitive promotional activity frequently increased the amount of subsidy during key periods. Today, local regulations have significantly restricted those subsidies as well as related competition. As a result, we estimate that less than half of iPhones sold in Japan in Q1 of this year were subsidized compared to about three quarters a year ago and that the total value of those subsidies have come down as well."
    watto_cobra
  • Reply 8 of 41
    @anome ;
    I hope (but don't really expect) that this includes places like Australia, where changes in the exchange rate have forced the price up. You complain about US$1000 phones? Try A$2000. Sure. after taking into account the exchange rate and sales tax it works out about the same, but there's still a psychological barrier to contend with. Despite being a relatively affluent nation, we aren't that affluent.

    If it works out to be about the same, then what's the psychological barrier? Because 2 is higher than 1? I don't understand direct numbers to numbers comparisons between markets, if A$2000 is the roughly the same as USD$1000.
  • Reply 9 of 41
    asdasd said:
    “Cook said. "And so as we've gotten into January and assessed the macroeconomic condition in some of those markets we've decided to go back to [pricing that is] more commensurate with what our local prices were”


    Cook ignoring DED’s sage advice again.  
    Did DED say Apple shouldn’t ameliorate the effects of a strong dollar by eating the impact of FX? Maybe he did, I must have missed that. 
    edited January 30 watto_cobra
  • Reply 10 of 41
    Zirlin said:
    In other words, we f*cked up by jacking our prices up higher than even we could believe.
    No need to mischaracterize Cook’s words, just hear them and understand them: the strong dollar caused prices to increase in certain countries—sometimes drastically (Cook mentioned Turkey with 33% increase iirc). So Apple plans to adjust pricing in some markets, making their products more affordable by eating the difference caused by FX. 
    fastasleepwatto_cobra
  • Reply 11 of 41
    Kumar.nevenKumar.neven Posts: 1unconfirmed, member
    Start of the end for Apple!
    Remember how Nokia reacted to downfall in sales but eventually it didn’t work?
    asdasd
  • Reply 12 of 41
    fastasleepfastasleep Posts: 2,686member
    ^ hoo boy, what a first post.
    hucom2000watto_cobra
  • Reply 13 of 41
    Start of the end for Apple!
    Remember how Nokia reacted to downfall in sales but eventually it didn’t work?
     :D 

    Don't get me wrong. I'm not claiming that things are going well for Apple. The current lack of true innovation (sorry Tim) combined with insane pricing ideas (sorry Tim) certainly is a recipe for disaster.

    However, Apple has a very strong foothold with iOS in the enterprise now. That too won't carry them forever, but they have time to make adjustments. No need to dramatize things.

    The problem I see is that they didn't do price adjustments preemptively. Once a company has the public image of selling overpriced products, it's difficult to shake that. That will take time and damage to Apple's reputation has been done, I fear.
    edited January 30 muthuk_vanalingamkitatitJeff_in_TXrepressthis
  • Reply 14 of 41
    asdasdasdasd Posts: 5,282member
    Apple is in no kind of freefall, unlike Nokia. In fact they have been preparing for a stagnation of iPhones for years now by bumping up services and accessories. More of that to come. 
    watto_cobra
  • Reply 15 of 41
    k2kwk2kw Posts: 1,712member
    avon b7 said:
    This isn't bad news for Apple - it's bad news for their competitors.

    Apple can afford to make some adjustments to their pricing even if they take a slight hit on margins. The problem is by lowering prices an iPhone becomes an even more attractive alternative to someone looking at a Galaxy S or other flagship. Even a change of 99 dollars (or Euros) has a significant impact on the perceived value of an item. Suddenly an undecided consumer looking at an iPhone vs another device could be swayed to pick the iPhone because of the lowered price.
    If you take into account more than three years of flat sales plus this decline, a price adjustment probably wouldn't help to push sales higher than they were last year, or the year before. 

    It would be more like rolling back the clock to how things were before the decline which wasn't showing any signs of growth anyway.

    Better than how things are right now, yes. Better than the last three years, unlikely.

    Apple needs to accompany the price adjustments with a compelling upgrade to the iPhone itself. Perhaps this year, that change will come but September is still a long way off.

    Competing Android manufacturers have been pricing their flagships in the same band as Apple (today) but seeing success, so while price is obviously a factor in Apple's poor results (YoY) it isn't the whole story as the features on offer from rivals simply have more appeal (at every price point below the premium bands too).

    Still, a tacit admission by Apple of setting pricing too high is also the beginning of the solution, so any reductions will be welcome.

    I paid around 650€ for a 64GB XR after trade in and the iPhone 6 battery refund. That seems reasonable. If it hadn't been for the change in trade in value, Apple would have lost the sale to me.

    I wonder how much of an impact that last minute change in policy had on the final numbers, which in spite of them being poor, perhaps could have been far worse.


    Apple need to come out with a newly designed budget phone.   Think iphone 6s/6s+ but with an updated A9 2 low energy core to extend battery core but only 1 high core.    Equip it with older cheaper camera, display, touchId.   But sell with Black, white, blue, red, green colors for $350/$400.    Market it to India and other emerging economies where their market penetration is very low.    Apple needs to get defections from Android if they plan to be a services company.   They should be selling 100 million of these phones a year.   This is the phone they should manufacture in India.
  • Reply 16 of 41
    bulk001bulk001 Posts: 476member
    So even Apple would seem to disagree with Daniel’s recent missive that had tried to make the case that higher prices helped Apple’s iPhone sales?  ;)

    avon b7
  • Reply 17 of 41
    tmaytmay Posts: 3,644member
    avon b7 said:
    This isn't bad news for Apple - it's bad news for their competitors.

    Apple can afford to make some adjustments to their pricing even if they take a slight hit on margins. The problem is by lowering prices an iPhone becomes an even more attractive alternative to someone looking at a Galaxy S or other flagship. Even a change of 99 dollars (or Euros) has a significant impact on the perceived value of an item. Suddenly an undecided consumer looking at an iPhone vs another device could be swayed to pick the iPhone because of the lowered price.
    If you take into account more than three years of flat sales plus this decline, a price adjustment probably wouldn't help to push sales higher than they were last year, or the year before. 

    It would be more like rolling back the clock to how things were before the decline which wasn't showing any signs of growth anyway.

    Better than how things are right now, yes. Better than the last three years, unlikely.

    Apple needs to accompany the price adjustments with a compelling upgrade to the iPhone itself. Perhaps this year, that change will come but September is still a long way off.

    Competing Android manufacturers have been pricing their flagships in the same band as Apple (today) but seeing success, so while price is obviously a factor in Apple's poor results (YoY) it isn't the whole story as the features on offer from rivals simply have more appeal (at every price point below the premium bands too).

    Still, a tacit admission by Apple of setting pricing too high is also the beginning of the solution, so any reductions will be welcome.

    I paid around 650€ for a 64GB XR after trade in and the iPhone 6 battery refund. That seems reasonable. If it hadn't been for the change in trade in value, Apple would have lost the sale to me.

    I wonder how much of an impact that last minute change in policy had on the final numbers, which in spite of them being poor, perhaps could have been far worse.


    That XR was to/for your wife; stop mischaracterizing.

    You won't buy a iPhone for yourself, and that is based on your constant pump of Huawei here with your posts on AI, and your dislike for iOS.
    fastasleeprepressthiswatto_cobra
  • Reply 18 of 41
    Forget ther rest of the world. iPhones are too expensive in the US. Blaming FX and trade issues on the poor showing of the iPhone is flat wrong. Of course, Apple can do no wrong, make no bad decisions. Therefore, consumers in the entire galaxy would normally flock to a US$1000 iPhone, but were put off by other factors outside Apple's control. An alternate reality is consumers have decided that before paying US$1000 for an iPhone, perhaps they will take a look at other offerings and found that they are not way behind as they once were. Or that they can wait another year since there is little difference between the 8+ and XS+
    edited January 30
  • Reply 19 of 41
    avon b7avon b7 Posts: 3,646member
    tmay said:
    avon b7 said:
    This isn't bad news for Apple - it's bad news for their competitors.

    Apple can afford to make some adjustments to their pricing even if they take a slight hit on margins. The problem is by lowering prices an iPhone becomes an even more attractive alternative to someone looking at a Galaxy S or other flagship. Even a change of 99 dollars (or Euros) has a significant impact on the perceived value of an item. Suddenly an undecided consumer looking at an iPhone vs another device could be swayed to pick the iPhone because of the lowered price.
    If you take into account more than three years of flat sales plus this decline, a price adjustment probably wouldn't help to push sales higher than they were last year, or the year before. 

    It would be more like rolling back the clock to how things were before the decline which wasn't showing any signs of growth anyway.

    Better than how things are right now, yes. Better than the last three years, unlikely.

    Apple needs to accompany the price adjustments with a compelling upgrade to the iPhone itself. Perhaps this year, that change will come but September is still a long way off.

    Competing Android manufacturers have been pricing their flagships in the same band as Apple (today) but seeing success, so while price is obviously a factor in Apple's poor results (YoY) it isn't the whole story as the features on offer from rivals simply have more appeal (at every price point below the premium bands too).

    Still, a tacit admission by Apple of setting pricing too high is also the beginning of the solution, so any reductions will be welcome.

    I paid around 650€ for a 64GB XR after trade in and the iPhone 6 battery refund. That seems reasonable. If it hadn't been for the change in trade in value, Apple would have lost the sale to me.

    I wonder how much of an impact that last minute change in policy had on the final numbers, which in spite of them being poor, perhaps could have been far worse.


    That XR was to/for your wife; stop mischaracterizing.

    You won't buy a iPhone for yourself, and that is based on your constant pump of Huawei here with your posts on AI, and your dislike for iOS.
    It was for my wife, as everyone here knows, but I paid for it out of my own pocket! And as everyone here also knows neither my wife nor I would have paid the original asking price. In fact we had already ruled an iPhone out because of pricing and bought something else with the money that had been set aside.

    Ironic that part of the reason for this admission by TC was also due to the intense competition from the likes of Huawei, no less.

    After so much insistence on defending Apple's pricing and pointing to ASP as the metric, now your only comment is on how I am 'mischaracterising' something (when in fact, I am not!).

    Now rewind and take a look at my comments on why I wouldn't buy a 2018 iPhone. Are you surprised to see TC explain exactly that reason yesterday? I mean, to the letter!



    edited January 30
  • Reply 20 of 41
    tmaytmay Posts: 3,644member
    avon b7 said:
    tmay said:
    avon b7 said:
    This isn't bad news for Apple - it's bad news for their competitors.

    Apple can afford to make some adjustments to their pricing even if they take a slight hit on margins. The problem is by lowering prices an iPhone becomes an even more attractive alternative to someone looking at a Galaxy S or other flagship. Even a change of 99 dollars (or Euros) has a significant impact on the perceived value of an item. Suddenly an undecided consumer looking at an iPhone vs another device could be swayed to pick the iPhone because of the lowered price.
    If you take into account more than three years of flat sales plus this decline, a price adjustment probably wouldn't help to push sales higher than they were last year, or the year before. 

    It would be more like rolling back the clock to how things were before the decline which wasn't showing any signs of growth anyway.

    Better than how things are right now, yes. Better than the last three years, unlikely.

    Apple needs to accompany the price adjustments with a compelling upgrade to the iPhone itself. Perhaps this year, that change will come but September is still a long way off.

    Competing Android manufacturers have been pricing their flagships in the same band as Apple (today) but seeing success, so while price is obviously a factor in Apple's poor results (YoY) it isn't the whole story as the features on offer from rivals simply have more appeal (at every price point below the premium bands too).

    Still, a tacit admission by Apple of setting pricing too high is also the beginning of the solution, so any reductions will be welcome.

    I paid around 650€ for a 64GB XR after trade in and the iPhone 6 battery refund. That seems reasonable. If it hadn't been for the change in trade in value, Apple would have lost the sale to me.

    I wonder how much of an impact that last minute change in policy had on the final numbers, which in spite of them being poor, perhaps could have been far worse.


    That XR was to/for your wife; stop mischaracterizing.

    You won't buy a iPhone for yourself, and that is based on your constant pump of Huawei here with your posts on AI, and your dislike for iOS.
    It was for my wife, as everyone here knows, but I paid for it out of my own pocket! And as everyone here also knows neither my wife nor I would have paid the original asking price. In fact we had already ruled an iPhone out because of pricing and bought something else with the money that had been set aside.

    Ironic that part of the reason for this admission by TC was also due to the intense competition from the likes of Huawei, no less.

    After so much insistence on defending Apple's pricing and pointing to ASP as the metric, now your only comment is on how I am 'mischaracterising' something (when in fact, I am not!).

    Now rewind and take a look at my comments on why I wouldn't buy a 2018 iPhone. Are you surprised to see TC explain exactly that reason yesterday? I mean, to the letter!



    Tim "admitted" as well that revenue was very good in Spain last quarter, and while I too note that you bought the iPhone for your wife, her preference, you have made no indications that you would purchase an iPhone at all, based on the lack of various "necessary" features that you tout for Huawei, and your dislike for iOS.

    It's okay not to like iOS, or the iPhone, but why even continue to pretend that you are a potential buyer?
    watto_cobra
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