Cook: iPhone sales slowed due to higher prices, death of subsidies less frequent upgrades

Apple’s boss Tim Cook has admitted inwards yesterday’s conference telephone phone next the latest quarterly profits report that—aside from China—other factors such every bit higher prices, decease of subsidies inwards many countries too customers belongings on to their handset a flake longer than park select all contributed to a reject inwards iPhone upgrades.

Jason Snell has transcribed Apple’s profits telephone phone on Six Colors, here’s what Cook said when an analyst pressed him on Apple’s pricing strategy (emphasis mine):

Steve Milunovich, Wolfe Research: Some select the perception that you lot priced the novel products, the novel iPhones, likewise high. What select you lot learned nearly toll elasticity too produce you lot experience that peradventure you lot pushed the envelope a lilliputian flake likewise far too mightiness select to convey that downwards inwards the future?

Tim Cook: Steve, it’s Tim. If you lot await at what nosotros did this by year, nosotros priced iPhone XS inwards the United States of America the same every bit we’d priced iPhone X a yr ago. iPhone XS Max, which was new, was a hundred dollars to a greater extent than than the XS, too and then nosotros priced the XR correct inwards the middle of where the entry iPhone eight too entry iPhone eight Plus had been priced. So it’s truly a pretty pocket-size divergence inwards the U.S. compared to concluding year.

He continued:

However, the unusual telephone substitution number that Luca spoke of inwards the telephone phone amplified that divergence inwards international markets, inwards item the emerging markets, which tended to displace much to a greater extent than significantly versus the dollar.

And so what nosotros select done inwards Jan inwards simply about locations too simply about products is essentially absorb purpose or all of the unusual currency displace every bit compared to concluding yr too hence acquire unopen or peradventure correct on the local toll from a yr ago.

So yes, I produce intend the toll is a factor.

I hollo upward Apple executives disputation inwards the by that iPhones weren’t simply for the rich people. But I digress, here’s what Cook had to tell nearly the decease of the smartphone subsidy.

Secondly, inwards simply about markets, every bit I had talked nearly inwards my prepared remarks, the subsidy is belike the bigger of the issues inwards the developed markets.

I had mentioned Japan, but also fifty-fifty inwards this country, fifty-fifty though the subsidy has gone away for a menstruum of time, if you’re a client that your concluding buy was a 6S or a 6 or inwards simply about cases fifty-fifty a 7, you lot may select paid 199 dollars for it. And now, in the unbundled basis it’s manifestly much to a greater extent than than that.

Cook says they select a number of actions to address the reject inwards iPhone upgrade rates, including the aggressive trade-in offers too and installment payments.

The Apple storey is shifting from iPhone units to ecosystems too services.

The CEO concluded:

So where it goes inwards the future, I don’t know. But I am convinced that making a dandy production that is high quality, that is the best affair for the customer. We operate for the user too so that’s the manner that nosotros await at it.

In the press liberate announcing quarterly earnings, Cook praised other aspects of Apple’s concern that select experienced well for you lot growth.

While it was disappointing to missy our revenue guidance, nosotros contend Apple for the long term, too this quarter’s results demonstrate that the underlying forcefulness of our concern runs deep too wide.

Our active installed base of operations of devices reached an all-time high of 1.4 billion inwards the root quarter, growing inwards each of our geographic segments. That’s a dandy will to the satisfaction too loyalty of our customers, too it’s driving our Services concern to novel records thank you lot to our large too fast-growing ecosystem.

Apple no longer reports units sales for iPhone too other products, robbing investors of the most of import metric every bit the society transitions its storey from 1 heavily subject on iPhone to a combined products + services business.

During the vacation quarter, the Cupertino society pulled inwards $84.3 billion inwards revenue, a reject of 5% from the year-ago quarter. Strategy Analytics estimates that 65.9 1000000 iPhones were shipped during the quarter, or 11.4 1000000 fewer handsets versus the year-ago quarter.

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