In a step that is sure to boost the sales of iPhones in overseas markets, Apple Inc announced plans to slash the prices of its flagship device. The move is largely prompted by the strength of the US Dollar that has sent iPhone prices soaring in some markets and has had a significant effect on sales figures. Apple has hence decided to fix the price by the price history in local currencies and not against the US Dollar. This is only the 2nd time in a period of 12 years that Apple has lowered the price of its flagship device.
The move is aimed at boosting sales in markets like China, where the sales figures have been underwhelming. Apple’s iPhones compete in the high end of the market anyway, and due to the rise of the US Dollar by around 10% over the last year, the company has found its sales figures lagging. It must be noted that the iPhone is dearer than the alternatives in the top end of the mobile phone market in China.
The plans were unveiled by Apple’s CEO Tim Cook on Tuesday, right after the company had recorded a drop in iPhone sales during the hugely important festive period. Apple last lowered its prices back in 2007, but that was a short time after the product had been launched. The present situation is quite different. In an interview with Reuters, CEO Tim Cook said, “We’ve decided to go back to (iPhone prices) more commensurate with what our local prices were a year ago, in hopes of helping the sales in those areas.”
In September last year, Apple released the iPhone XS at a retail price of $999. More importantly, the price of the model was the same as that of the iPhone X. That may have been an excellent development for consumers in the US, but it did not quite work out for people in countries like China and Turkey. Due to the rise in the US Dollar, the consumer had to pay significantly more to get their hands on the iPhone XS. This effectively meant that overseas consumers had to carry the can for the weakening of their local currencies against the US Dollar. Apple will now reset the price of their flagship products in these locations to keeping the price as historically similar to the old price as possible. Apple will need to take the hit for strengthening dollar in their quest to boost sales. Time will tell if it is a sound tradeoff.
