Apple iPhone Prices Go Down to Cover for Sales Warning
Last updated on January 15th, 2019
Media reports from Shanghai claim a deliberate downfall in the iPhone prices by major retailers like Alibaba-backed Suning and JD.com, this week. The step is been taken by retails as a reaction of the warning extended by Apple on poor sales of the product in the country, affecting rare revenue fall.
The discounting is a step taken to increase demand for the newly launched 64GB iPhone XR. The change also signals at Apple’s weak holiday sales to have extended over in the third quarter which is a hit at the company’s revenue structure.
Going by the Reuter’s observations, the iPhone prices went down on Chinese e-commerce retail portals in the mid of this week. The retailers went ahead to react at the warning by offering six major promotions this weekend to meet the sales targets.
As of now, Apple has refrained from commenting on the issue. Though prices of the iPhones sold through its Chinese website are to remain the same.
Such discounted prices are not a common phenomenon in the global market, especially around shopping seasons such as single’s Day in November, but these cuts were made strategically to cover for the stagnation of sales, of the recently launched products by Apple including, iPhone XS and iPhone XR.
Mo Jia, a Canalys analyst who tracks China’s Smartphone industry even suggested that there may also have been a case wherein Apple itself would have lowered the iPhone prices to meet the sales targets or the same would have been done by distributors to move out more units.
“It’s possible Apple wants to test the market’s feedback if it brings down the channel prices. Or, Apple might be under pressure to clean out its stock of iPhones,” Jia said.
The sudden strategic fall may have been a result of the fact that Apple was lagging behind to cope up with its competitors in China, such as Huawei Technologies Co Ltd, which is offering cheaper options to Chinese population and is a home grown MNC.
However, the fact is that Apple did issue first revenue warning in the last 12 years; due to fall in Chinese demand for the product, affecting its shares by 10 percent, also a record as it is the most straining intra-day fall in last six years.
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