Apple Inc. plans to cut the price of several of its flagship iPhones for only the second time in the device’s 12-year history, fixing its retail price to past value in local currencies outside the United States rather than the rising U.S. dollar.
The move is an endeavor to stem frail sales of the iPhone, especially in foreign markets such as China, where a 10 percent upswing in the U.S. dollar over the previous year or so has made Apple’s product – which now compete at the peak end of the market – much expensive than opponents.
Apple Chief Executive Tim Cook revealed the plan after the firm announced the first-ever dip in iPhone sales amid the important holiday shopping period. The corporation has only once before changed iPhone prices, just after it launched in 2007.
Apple did not say in which nations it would modify iPhone prices. Resellers in China previously started cutting iPhone prices recently after Apple lowered its sales forecast for the quarter ended in December.
The firm priced its new iPhone XS, which was released in September, at $999, a similar price in U.S. dollars as its predecessor, 2017’s iPhone X.
That worked for U.S. customers, but in nations such as China and Turkey the local currency had tumbled so much versus the rising U.S. dollar, it made the phone notably expensive than its predecessor a year before. Apple had basically asked the customer to bear the price of the strengthening dollar.
On Tuesday, Cook said Apple will modify foreign prices in several markets by resetting them at or nearly what they were one year before in local currencies. Effectively that means Apple will absorb the price of the strengthening dollar.
“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,” Cook told a news agency in an interview.
In the corporation’s quarterly profit call, Cook also emphasized the influence of foreign exchange problems in Turkey, where he said the local lira had drop in price by 33 percent against the dollar and Apple’s sales were down by $700 million from the prior year. In November, Apple also quoted currency pressure on its costs in Brazil, India, and Russia.
Apple has not said when or how frequently it may adjust its prices due to foreign currency changes.
Chief Financial Officer Luca Maestri said the cost changes may not expand to its services business, which incorporates Apple Music and the App Store.
However, that unit beat analyst anticipations with $10.8 billion in sales in the quarter ended in December. Growth has slowed compared to prior years.
Maestri said slower development was partially because prices increased for users in non-U.S. markets.
“Roughly 60 percent of our services business is outside the United States, and as you know, the U.S. dollar has appreciated in recent months,” Maestri said. “And in general, we tend not to reprice our services for foreign exchange on a very frequent basis.”
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