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Home / Technology / Apple (AAPL) does not need to press the panic button yet on iPhone prices

Apple (AAPL) does not need to press the panic button yet on iPhone prices



Has Apple's (AAPL) experience for iPhone XS and XR sales proposed to drastically reconsider its high-end iPhone pricing? Probably not.

However, it may indicate that Apple is better at cope with its traditional formula to sell "cheaper" high-end phones, instead of changing things like it did this year.

So many readers Apple is acceptably aware that Apple's shares have fallen sharply since the beginning of October, thanks to a technological correction and concerns for a softer than expected demand for its latest iPhones. IPhone concerns have been increased with sales alerts or tutorials from a number of Apple vendors, including Cirrus Logic (CRUS) (receiving over two thirds of Apple's revenue), Qorvo (QRVO), Lumentum (LITE), Japan Display and AMS, as well as reports about iPhone production cuts.

Jitters have also been boosted by the various actions Apple has taken to boost iPhone XS and (especially) XR sales. These include the purchase of purchases that it offers for older iPhones through the GiveBack program, more aggressively promoting these purchase offers at Apple's physical and electronic stores and allegedly supporting iPhone XR discounts from Japanese operators through subsidies.

All of this has driven the arguments that Apple was too greedy with its iPhone pricing and is now facing the consequences. This explanation, however, reflects the fact that the cheapest of Apple's three new iPhones, the 6.1

-inch, LCD-based, iPhone XR, which – judges after production cuts – reports the XR exposure of vendors who have warned and Apple's attempt to promote the device looks seem to lack sales expectations more than their precious siblings.

And between the 5.8-inch iPhone XS ($ 999 US launch) and XS Max ($ 1,099 launch price), XS Max has sold better. The Analytics Company Mix Panel data indicates that XS Max was 2.81% of the installed iPhone base on December 10 and iPhone XS 2.26%. The XR ($ 749 start price), which admittedly went on sale five weeks later than the XS and XS Max, amounted to only 1.66% of the base.

To sum up the cheapest of Apple's new iPhones, a device with a starting price halfway between those like the iPhone 8 and 8 Plus carried a year earlier when launched, seems to have the hardest time that meets up with the sales expectations. And the expensive of the phones, a device with an unprecedented starting price, seems to be faring the best in relation to the expectations.

Certainly Apple's main error in this iPhone upgrade cycle was not the pricing per se, but its decision Not to keep its latest flagship iPhone (in this case, iPhone X) around with a discount. Instead, it launched a brand new iPhone (iPhone XR) that has remarkable hardware compromises compared to both the year and last year's flagship phones (an LCD instead of an OLED display, only one rear camera, an aluminum case and no 3D Touch support ).

This is the type of strategic decision that obviously can easily be avoided with next year's iPhone launches. In fact, with the Wall Street Journal reporting that Apple has resumed producing iPhone X, the company may not wait until September to overtake the low end of its high-end lineup, at least in some markets.

Meanwhile, relatively healthy demand on the iPhone XS Max indicates that a flagship with premium prices can still sell reasonably well if it provides significant hardware improvement or two. There was clearly some nicely demanded demand for an iPhone X-type device with a larger screen, and XS Max addressed it.

With global smartphone sales clearly under pressure as upgrade cycles, it is still advisable to wonder how much iPhone device growth Apple will see this year when it does not deliver major hardware changes.

However, this does not mean that the company needs to hit the panic button in terms of iPhone pricing – especially given that the company's earnings growth strategy Now, it's changing ever more about increasing average selling prices (ASP), service revenue and sales of complementary hardware, instead of significantly growing iPhone volumes.

This column was originally shown on December 10th at Real Money, our premium page for active traders. Click here to get more beautiful columns like this.

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