Apple is planning to cut prices of some of its flagship iPhones in countries other than the US. Price cuts, when applied, will be the second time the company has decided to go this way since the iPhone’s debut in 2007.
The move is an attempt to alleviate the low sales situation the company is facing, especially in China, where due to a 10 percent rise in US dollars over the past years, iPhones have gotten even more expensive.
Apple CEO Tim Cook revealed the plan on Tuesday after the company reported a first-ever dip in iPhone sales during the key holiday shopping period.
The company did not mention the countries it would adjust the iPhone prices in, nevertheless, resellers in China have already started cutting iPhone prices earlier this month, after Apple lowered its sales expectations for the quarter ended in December.
Apple priced its new iPhone XS at $999, which was the same price as its predecessor iPhone X last year.
The price, although worked fine with the U.S market, turned out to be significantly higher than the price of iPhone X last year in countries like China and Turkey. This was due to the fall of local currencies of these countries against the surging U.S Dollar. The strengthening of the dollar has resulted in the fall of iPhone sales overseas.
Cook said on Tuesday that he will be adjusting foreign prices in some markets by resetting them close to or equal to what they were one year before in local currencies. That means Apple will be effectively absorbing the cost of strengthening the 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 Reuters in an interview.
Apple’s quarterly earning cost on Tuesday saw Tim Cook highlighting the impact of foreign exchange problems in Turkey, he commented about the Turkish lira deprecating by 33 percent against the dollar which resulted in Apple’s sale to go down by $700 million (₹5000 crore roughly) from the previous year. Apple had also cited currency pressure on its prices in Brazil, India, and Russia in November last year.
Apple has not said where, when and how often the company will be adjusting the price because of the foreign currency changes.
Chief Financial Officer Luca Maestri said the price adjustments might not be introduced to its service business which includes Apple Music and App Store.
Maestri said slower growth was partly because prices rose 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.”