In an attempt to boost sales of the iPhone, Apple Inc. has hinted its plans to reduce the prices of some iPhones outside the US, especially in China where the dollar has strengthened by 10%, thereby making the products much pricier than competitors. Tim Cook, Apple Chief Executive made this disclosure after the company’s report on Tuesday, stressing the fall in iPhone sale during the last holiday shopping period.
Although Apple didn’t explicitly disclose which countries would be affected, shops in China have already begun adjusting prices to suit the market prices of other rivals. Apparently, the tech firm is trying to absorb the increasing value of the dollar to protect their customers from the drastic effect of the fluctuating currencies. Tim Cook, during an interview with Reuters, said:
“What we have done in January in some locations and for some products is essentially absorb part or all of the foreign currency move as compared to last year.”
The company’s new product, iPhone XS has its new price pegged at $999, the same price as that of its predecessor. Even though this could work within the US, where it has its major market, it’s likely to be a flop in countries like China, Turkey, and Nigeria where the US currency is strengthening over their local currencies. Whatever the firm decides, the Chief Financial Officer, Luca Maestri noted that the price adjustment is unlikely to extend to its other businesses which includes Apple music and App store.
The fear with Apple is not recent. The company experienced a deep fall in shares in October. This has consequently resulted in declaring the number of iPhones, iPads, and Macs it sold quarterly, seeing that consumers are getting less interested in Apple products, due to the increased prices for customers outside the US. Maestri said:
“Roughly 60% of our services business is outside the United States, and as you know, the U.S. dollar has appreciated in recent months. And in general, we tend not to reprice our services for foreign exchange on a frequent basis.”
However, amidst these falls, the company has proven to be resilient. The company declared over 4% gain on Tuesday in after-hours trade.
Nevertheless, the proven resilience doesn’t go past sales in China, and Turkey where the company has a large market. Sales has dropped significantly in these countries by over 25%.