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

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."

41 Comments

Zirlin 23 comments · 8 Years

About 5 years ago

In other words, we f*cked up by jacking our prices up higher than even we could believe.

ericthehalfbee 4489 comments · 13 Years

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.

rogifan_new 4297 comments · 9 Years

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.

avon b7 8008 comments · 20 Years

ericthehalfbee 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.

asdasd 5682 comments · 21 Years

“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.