The price of iPhone, especially the latest model, in China has finally come down sharply, amid the lukewarm market response to iPhone XS and iPhone XS Max.
Apple Inc. (NASDAQ:AAPL) has not been having the best of times since the release of its most expensive iPhones, late last year. Ever since then, the iPhone maker is finding tough to deal with the market conditions. Sales of iPhone in its fiscal Q1 2018, ending December 2018, failed to match the market expectations, once again. Considering a major chunk of Apple revenue comes from the sales of iPhone, the declining sales affected the company’s overall revenue performance. One of the main reasons for the lower than expected revenue, as mentioned by Tim Cook, was the declining sales of iPhone in the China market – the second largest market for Apple after the US.
Now, in a desperate attempt to increase sales and cut losses, carriers and retailers have decided to cut the prices of iPhone XS and XS Max in China.
Apple iPhone Price Cut: loss for retailers?
Major e-commerce sites in China have decided to cut the prices of iPhone XS and XS Max. A discount worth CNY 1,000 (roughly Rs. 10,479) on the iPhone XS will be offered by Suning.com. Suning already slashed the prices of all other iPhones in January except for the iPhone XS. The same offer for the iPhone XS has also been offered by Pinduoduo, another popular e-commerce site in the country. JD.com has claimed that it will be lowering the prices of iPhone XS and XS Max by CNY 1,700 (Rs. 17,815).
But this begs the question – are the retailers and carriers settling for fewer profits?
Rumours have pointed towards Apple’s decision to slash the wholesale price of its products to maintain the profits of the resellers. Thus, it might go on to explain why these many e-commerce retailers have decided to cut the prices of iPhones with such margins.
This isn’t the first instance of Apple resorting to desperate measures in a bid to increase sales of iPhone in China. It was only recently that the Cupertino giant took the route of trade-in deals to do the same. These measures represent a drastic change in the marketing strategy of the company, which has not shown any signs of compromise under tough periods previously. The lengths to which it is going to ensure good sales in the Chinese market point towards its importance towards the company. And why not, China contributes a lion share to Apple’s revenue every quarter and is the biggest market outside the US.
iPhone Innovation: A Derailed Strategy
Apple seems to be no longer regarded as the company with the most innovative products in the smartphone market. With companies like Samsung and Huawei set to flood the market with foldable smartphones at the moment, it is easy to see that the iPhone is slowly beginning to lose its charm. The company might be focusing more on the subscription and services aspect of their business a bit more, but if this trend continues, they won’t be having a user base to provide services to in the first place!
Therefore, despite all the desperate measures taken by the company, the next release of the iPhones is going to be incredibly vital. This is because of the fact that with all the competition around, they might cease to be the first preference anymore. While Apple might have been getting away with the previous iPhones by offering not too many upgrades from the previous version, they have less scope for error now.