In an interview with Reuters, Apple’s CEO Tim Cook said “Apple is rethinking how it prices the iPhone outside the United States” explaining that setting the price in U.S Dollars, made the phones more expensive in local currencies as the dollar strengthens.
This comes as, Apple announced financial results for its fiscal 2019 first quarter which ended in December 29, 2018 yesterday. And it wasn’t all good for the California Tech Giant. The report shows a decline of 5 percent in revenue compared to a year ago, with a decline of 15 percent in iPhone revenue. Simply put; people bought fewer iPhones in the last quarter.
Why the Decline
One reason for the revenue decline is the reduction in international sales which account for about 62 percent of the quarter’s revenue. While speaking with Reuters, Cook pointed out that in markets with currencies that weakened considerably against the dollar over last year, iPhone price increases were obviously more. This in a way translates to people buying fewer iPhone in these regions.
Another reason could be that the we have reached a saturation point with iPhones for now, where everyone who wants it, seems to have an iPhone already. This is due to an interesting figure released by the company for the first time: there are a staggering 900 million active iPhones around the world.
Reducing the Price of iPhone as a Fix
In his discussion with Reuters, Apple CEO Tim Cook, went on to point out what the company’s next move will be, adjusting the international prices of future flagship phones:
…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 MORE COMMENSURATE WITH WHAT OUR LOCAL PRICES WERE A YEAR AGO IN HOPES OF HELPING THE SALES IN THOSE AREAS. – Reuters
More now than ever before, Apple can afford to sell more devices at lower prices and still benefit immensely from the sales. This is owning to the fact that revenue from its services sector is booming. From the released report, services revenue reached an all-time high of $10.9 billion, up 19 percent over the prior year. These services includes channels like Apple music and the App store. Revenue from Mac and wearables, Home and accessories also reached an all-time high, growing 9 percent and 33 percent respectively.
As we expect how this will turn out later this year – September – when the company unveils its iPhones each year, it is important to acknowledge the changing market in the smartphone industry in 2019. With innovative new form factors and features being tested by vivo, xiaomi and of course Samsung. 2019 is also expected to be a year that herald a range of foldable phones. For Apple to gain more this year, a lot has to be done to meet the competition. Conventionally, it is expected that with time, prices of smartphone will increase due to some factors.
What do you think? Will you be getting yourself a new iPhone if the price is reduced? Let’s know your thought in the comment below
