Apple has refused to tell The Reg whether the premium iPhone price cuts that CEO Tim Cook promised for punters outside of the US will reach the UK, citing inclement weather as an impediment to comms. A local price cut seems unlikely.
Sales of the handset fell 15 per cent year-on-year to $52bn in Apple’s Q1 ended 29 December, Apple confirmed last night. Total sales across the business fell 5 per cent to $84.3bn. Excluding the iPhone, Apple grew 19 per cent.
Cook blamed "weaker macro economic conditions" in China for a $4.8bn revenue decline there – Apple warned of this on 2 January – and admitted that iPhone upgrades were "lower than we anticipated".
"Our customers are holding onto their older iPhones a bit longer than in the past. When you pair this with the macroeconomic factors, particularly in emerging market, it resulted in iPhone revenue that was down 15 per cent," he said.
The reasons for the iPhone sales slump were threefold: foreign exchange; hardware subsidies becoming "less commonplace"; and a battery replacement programme.
"The relative strength" of the US dollar "made our products more expensive in many parts of the world", quoth Cook. He used Turkey as an example, where the lira depreciated by 33 per cent in a year.
"However, the foreign exchange issue…. amplified that difference in international markets, in particular the emerging markets which tended to move much more significantly versus the dollar."
The iPhone XS is sold from $999 (£763) in the US, £999 in Britain and 8,699 yuan (£989) in China. The US dollar is trading at $1.31 to every Brit sterling, versus $1.42 a year ago, so not a big slide but with some sort of Brexit around the corner, who knows what will happen.
Cook used the tightening of local regulations in Japan to demonstrate his point about carriers being restricted in subsidising iPhone sales as part of a services contract. He added this dynamic was witnessed in many "developed markets".
And the battery replacement programme "made it inexpensive and efficient" for "millions of customers" to swap out the battery and retain the iPhones for longer. Apple said last October that the replacement cycle had been extended by three to four more months.
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The level of iPhone channel inventory, as highlighted by Wall Street Bernstein in our report yesterday, is estimated to be in the four to five million region with a material draw-down of 2 million +. The analyst warned slower sales in Apple's peak Q1 did not bode well for the remainder of the fiscal year.
Cook said he still believed in the the latest flagship models as being "by far the best we've ever shipped", containing as they do the A12 Bionic chip and the "next-generation" Neural Engine. And to let the world know how great the iPhone truly is, Apple, for the first time, released figures on how many units it has flogged to date and in fiscal '18 – more than 900 million and 75 million respectively.
Nevertheless, to stimulate demand and counter the inflationary impact of the US dollar, coupled with the other factors outlined, Cook told Reuters:
"We've decided to go back to (iPhone prices) more commensurate with what our local prices were a year ago, in hopes of helping the sales in those areas."
Chips and dips
Apple doesn't typically communicate with The Register, but this morning your correspondent called the mobile – presumably an iPhone – of Paul Luke, EMEA business director for Apple Retail and asked if there is to be a local dip in the price of its mobes.
"You need to contact our press team," the Apple stalwart told us over the blower. "I've got a problem with snow where I am at the moment."
Luke abruptly hung up but according to his LinkedIn account, he is based in Northampton. That's Northampton in the East Midlands, rather than Northampton in Pennsylvania, where it really does get cold.
Apple's press team has yet to respond to our email request for comment. ®