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Apple to lower prices of some iPhones outside of the US after smartphone sales decline

The move will be the second-time prices have been lowered in the device’s 12-year history.

In an attempt to offset the stronger United States (US) dollar and push for smartphone sales, tech giant Apple Inc is planning to cut the prices of some of its iPhone models. The firm is looking to retain the prices of the smartphones in its retail value to close to what they were priced a year ago in local currencies.

The move, will be the second-time prices have been lowered in the device’s 12-year history. For example, in the Chinese market, the US dollar has risen by over 10% in the past year against the Chinese yuan, making the firm’s smartphones more expensive than its competitors. The last time Apple cut its iPhone prices was a few months after its debut in 2007.

Although Apple marginally beat its revenue forecast for the first quarter, the group’s iPhone sales fell by 15%, at US$52.98 billion. Apple’s chief executive Tim Cook had revealed in yesterday’s earnings report that it will be the last quarter where the firm will disclose its iPhone unit sales numbers.

Mr Cook had blamed the downward slide in iPhone sales to customers not upgrading their devices every year. The weakness in global iPhone sales was also attributed to the economic slowdown in China.

'Our customers are holding on to their older iPhones a bit longer than in the past. When you paired this with the macroeconomic factors particularly in emerging markets, it resulted in iPhone revenue that was down 15% from last year,' Mr Cook had said.

Strong US dollar impacted overseas sales

Although a price revision is expected, Apple did not disclose the countries that would have an adjustment in the iPhone prices.

In September, the firm priced its new iPhone XS at US$999, the same price as 2017’s iPhone X, but due to the rising strength of the US dollar, the smartphone was more expensive outside of the US after converting to local currencies, especially in countries such as China and Turkey.

In Turkey, the local lira had depreciated by 33% against the US dollar, said Mr Cook. Currency pressures have been felt in other countries such as Brazil, India, and Russia, the firm had said previously.

The move would mean that Apple would have to absorb the cost of the stronger US dollar into its margins.

Chinese smartphone makers gaining ground in the global smartphone arena

Other than a stronger currency exchange, China has seen its local players rising in dominance over the smartphone market.

Earlier this month, Apple’s rival Korean smartphone maker Samsung had flagged a 29% profit slump for the fourth quarter, plagued by weak demand from the Chinese economy.

According to data firm Strategy Analytics, Chinese smartphone makers including Huawei and Xiaomi have been steadily gaining global market share.

Huawei which held a 9.9% global stake in the third quarter of 2017, has risen to a 14.4% stake in just a year. Xiaomi has also followed closely behind, up at 9.2% from 7.0% a year ago.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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