Apple reported a loss for the festive season — the revenues of the brand fell by 15% due to low demand for the iPhone. Shortly after the publication of the report, Apple CEO Tim cook announced that it plans to cut prices on iPhones in certain countries, to somehow spur sales of the gadget. It is not excluded that among these countries will be Russia.
Apple presented the financial report for the first quarter of 2019, and its results, as predicted, disappointing. Revenues fell by 15%, which is the worst company in the new year period over the last ten years.
Apple CEO Tim cook said that there are several reasons, affecting the financial position of the company. For example, in some countries the price of the iPhone was biased due to the depreciation of the local currency against the dollar, which led to a decrease in the demand for smartphones.
In addition, the program Apple for battery replacement at a reduced price contributed to the fact that iPhone owners do not have to buy a new model, and have continued to use the old one.
According to CFO Luka Maestri, these factors will continue to impact on the finances of Apple in the second quarter of this year.
It is expected that the total amount of income in the next reporting period will be reduced by $6 billion, or 10% on the previous year.
According to the report, Apple has faced serious problems with sales in China dropped by $4.8 billion, or 36%, compared to 2018. Cook said that demand in China fell by three of the most popular product Apple — iPhone, MacBook and iPad.
This year the demand for iPhones has decreased worldwide. According to the head of Apple, the owners of the gadgets are less likely to upgrade their device by buying a new iPhone on average once every three years. According to the survey SurveyMonkey users from the USA I see no reason to upgrade to the new model, as they are too expensive, but they have features that would make the iPhone an indispensable device.
Meanwhile, the number of users Apple is still continuing to grow. For company management this figure is the most important in the long term, as it depends on the promotion of Apple services.
The company was the first time in history revealed the number of iPhone owners worldwide.
Currently this figure is equal to 900 million active users, 75 million more than last year.
The number of users of Apple services also increased compared to 2018 — 360 million people. The company expects that by 2020 this figure will reach 500 million users.
According to Reuters, in such a difficult financial situation, Apple had to resort to extreme measures. The second time in its 12-year history, the company will cut prices on the flagship models of the iPhone in those countries where the national currency has dropped significantly against the U.S. dollar.
This step needs to spur weak sales of iPhones in countries where Apple gadgets are much more than competitors, due to the weakening of the local currency.
Apple CEO Tim cook did not name specific markets where the prices decrease is expected, but it is not excluded that among them will be China, Turkey, Brazil, India and Russia.
“We decided to go back to the iPhone price that will be more comparable to the local rate a year ago. Hope this will help to increase sales in these regions,” said Tim cook in an interview.
According to the CFO Luka Maestri, the alignment of prices will apply only to Apple devices and will not affect services, such as Music or the Apple App Store.
At the end of last year, Apple refused to disclose statistics on iPhone sales — the experts considered that the company is dissatisfied with the findings and doesn’t want to admit that new smartphones sold worse than she expected. In mid-January, Intel, the supplier of modems for Apple devices accidentally lifted the veil of secrecy, stating that the income from sales of modems decreased significantly “lower than expected” due to poor demand for smartphones in this period, Intel lost $200 million
The experts conducted analysis of the available data and calculated that during the festive period, Apple’s sales fell to 11.8 million devices. According to past quarterly reports, the Christmas season, Apple sold 74 million to 78 million smartphones, which means a deficit of 11.8 gadgets is about 16% relative to the previous figures.
Read more •••