While it took some serious financial hit for Apple to finally realise, the company has now taken cognisance of its steeper pricing in international market, and is hence re-assessing the same. All of this came on the back of a 15% Y-o-Y decline in the company’s Q1 earnings this year, as well as a lower earnings guidance that it announced in December last year.
In an interview with Reuters earlier today, Tim Cook acknowledged that the company is reassessing how it sells handsets outside of the U.S. Apple traditionally, has let the benchmark Dollar decide the pricing of its products internationally. As a result, post applying various import duties of the respective country, prices tend to be steeper when compared with the U.S. ones. Apple’s current quarter results — which were already downgraded by the way — have prompted the company to think so.
“When you look at foreign currencies and then particularly those markets that weakened over the last year those (iPhone price) increases were obviously more,” the CEO said. “And so as we’ve gotten into January and assessed the macroeconomic condition in some of those markets we’ve decided to go back to more commensurate with what our local prices were a year ago in hopes of helping the sales in those areas.”
However, despite weak hardware sales, Apple saw a tremendous surge in its Services revenue, rising primarily on the back of increased adoption of Apple Music as well as more apps being put up on its App Store. In fact, such was the effect of companies’ services revenue surge, that investors mostly neglected hardware sales decline. The company’s shares rose 6 percent to $163.50 in after-hours trading. They had fallen more than 30 percent since November on concerns about weak iPhone sales
Cook also expressed optimism on the ongoing US-China trade disputes. He mentioned that tensions have appeared to eased a bit when compared with December and further easing is on the cards.
