During these last months we have seen how Apple has reduced the price of its iPhones in China and Japan due to the ‘bad’ economic results they have had in Q1 2019. This price reduction aims to achieve better sales in the first quarter of 2019 in markets that are suffering a general slowdown. These would not be the only reductions to come, according to an analyst today.
Apple’s lower Q1 2019 earnings forecast of nearly $9 billion in revenue, would have been driven by low sales of the iPhone 2018 in China and Japan . To counter this, Cupertino’s company would have activated various discount programs in Japan in November and in China we have seen this recently.
These kinds of cuts in the price of the iPhone would not have ended, but will continue to occur in future months. According to Wedbush China is a critical market for Apple and its future in the market so it is expected that the price of the iPhone XR will continue to be cut in the coming months. They express their dissatisfaction with the rest of the analysts who talk about the growth of the company in general, but they advocate that Apple should maintain the installed base in these countries.
In his opinion Apple is facing a ‘code red’ situation in China and that is why they must launch a new strategy around the price of the iPhone XR and the rest of the iPhones that are coming, focusing already on the possible iPhone XI. Webbush believes that before thinking about growth, the company should create a ‘fence’ around its users to prevent them from decreasing the number of users with an iPhone in their hands.
The iPhone XR is undoubtedly the terminal that Apple will bet on to attract a new and young audience that may be interested in its ecosystem. That’s why most of the discounts we see in China and Japan are focusing on this device and not on other iPhones.
In addition to reviewing its pricing policy, Wedbush believes that the company should bet on its services , anticipating the launch of the long-awaited streaming video platform with original series and films that they have been preparing for years. Obviously this path will not be easy since there are much more consolidated services in front of it, such as Netflix or Amazon.
In order to overcome these rival platforms from Apple they will have to acquire several companies specialized in the audiovisual production sector, although and it is completely ruled out that they will end up acquiring Netflix or Disney as already speculated.
Leave us in the comment box what you think about this hypothetical price drop in the future.