This is why Wedbush analyst Daniel Ives think that Apple will need to make “significant price cuts” on the iPhone XR in order to rein in its “pricing hubris”. According to Ives, “As we have discussed with investors, it has been Apple’s pricing hubris on iPhone XR that was the major factor in the company’s December-quarter earnings debacle. While iPhone XS continues to be focused on premium price points, the linchpin on this upgrade cycle was XR within the China region representing roughly 20% of all iPhones in the window of an upgrade opportunity.”
He adds, “While some investors will fret around price cuts and what it means for top-line growth in the next few quarters and losing perception as a luxury smartphone, taking a step back it’s all about the installed base for Apple.” Apple’s CEO Tim Cook has recently acknowledged that the iPhone demand has been weaker than expected, and cited how its devices weren’t particularly well-received in China.
Some are saying that this could be because of an informal boycott taking place in China where customers are boycotting Apple’s products over the trade war with the US. Alternatively with there being so many more affordable handsets from Chinese OEMs that cost a fraction of the iPhone’s price, it’s also not hard to see why some can’t justify paying for Apple’s new iPhones.