Apple Inc. is likely to face some major issues owing to dipping sales figure of iPhones. Apple CEO Tim Cook has recently mentioned in a letter to the investors that the company has been witnessing a weaker demand for iPhones owing to the fact that the consumer upgrade cycles have been becoming longer. According to Cook, consumers are reluctant to upgrade to the latest model being offered by the company. The demand has been especially lesser in the region of Greater China. Apple also revealed that the economic condition of the country is slowing down gradually and the competition from various local brands like Huawei is increasing.
The holiday sales figure for Apple’s Smartphone has been lower than anticipated. One of the primary reasons, as it seems, is that existing customers have been taking significant advantage of the heavily discounted prices for the iPhone battery replacements. Earlier, in December 2017, Apple was accused of gradually slowing down the older iPhone’s performance. In response to the public outrage, Apple has cut down the battery replacement price for the out-of-warranty phones from $79 to $29 for a one-year duration. Therefore, anyone with an iPhone 6 and other later versions could get a new battery under $30. This move has influenced the sales of the company adversely.
Cook mentioned that the revised expected revenue for the Apple iPhone sales will be $9 billion lower in the first quarter than the initial estimation. Earlier this year, Apple informed the investors that the sale of the Smartphone during Q1 will be in $89 to $93 billion range. This has now been revised to the value of $84 billion. Following the announcement, the stock of Apple was plunged by 10%.
However, Tim Cook clarified that all the categories excluding the iPhone, including its Mac, Services, iPad, Home, Wearables, Accessories and others combined are witnessing a CAGR of almost 19%. Apple has been facing challenges across the emerging markets in the Asia Pacific region. Rising competition from local brands that offer superior quality in terms of service but at a fraction of the Apple iPhone cost are gaining customers rapidly. Even One Plus, a premium range considering other Smartphone prices, costs half the price of the latest iPhone, while the quality of the phone is arguably at par with that Apple has to offer in its Smartphone segment. To make matters worse, an uncertain global currency and dollar fluctuations have also contributed to the dipping of the sales.
Few Indian users, after hearing the news, took to their twitter handle this morning saying that they are not ready to upgrade their new iPhones because of their absurd and high prices. However, Apple cannot ignore this issue for long, since iPhone hold the largest share of its company’s revenue pie, and a slowdown will cause major and real concern for the tech giant. It is yet to be seen what new strategy Apple devices hereafter to make things better for the brand, which is still considered among the pioneers in technological advancement in the smart devices segment.
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