Why are Apple’s iPhones so expensive - and will they get cheaper?
Chief executive Tim Cook hints at price cuts following poor smartphone sales
Apple is considering changing how it prices iPhones following lacklustre sales of the brand’s latest handsets, Tim Cook has announced.
Speaking to Reuters, the Apple boss said the tech giant’s devices have become more expensive in local currencies as a result of the strengthening of the dollar over the past 12 months. And that has hurt sales in emerging markets, he added.
In a bid to reverse the trend, the company now plans to to revert back to the prices used for local currencies before Apple started matching device values to the dollar, back in late 2017.
“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,” Cook explained.
He did not specify whether that plan will include changing iPhone prices in the UK. “At the the moment, according to Apple’s official website, an iPhone Xs with a 5.8in display costs from $999 (£763) in the US compared with £999 in the UK,” reports the BBC.
Although Apple has never explained publicly why it hiked iPhone prices in the UK two years ago, the Daily Mail says it may have been a result of the weakening of the pound following the Brexit vote.
On the other hand, the company may have driven up prices simply because “it can get away with charging more”, the newspaper adds.
Either way, the strategy no longer seems to be working.
Revenue from the iPhone, Apple’s biggest money-maker, fell by 15% over the final financial quarter of 2018. That meant the firm’s overall revenue dropped by about 5% compared with the same period last year.
Apple has also blamed China’s slowing economy for the fall in revenue, with sales in the Greater China region, which includes Hong Kong and Taiwan, plummeting by 25% over the past quarter.
But pricing is not entirely to blame for China’s disinterest in the iPhone.
Chinese smartphone makers Huawei and Xiaomi have posed a serious challenge to Apple in the market in recent years.
Chinese device maker Oppo has also seemingly emerged from nowhere over the past 12 months and now holds a 20% market share in the country, says VentureBeat.
Huawei leads the way with 27%, while Apple only has a 9% share in China.