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Should Apple lower the prices of their new released Iphones?

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1) When lowering the prices of their Iphones it would increase the sales.
2) When lowering the prices of their Iphones Apple will gain more customers.
3) Apple will start profiting faster.

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1) New released Iphones would become out of stock faster.
2) Forgery Iphones will start to increase more.
3) Low quality materials will starts to be used on the Iphones.

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Apple blamed a collapse in China for what it expects to be an unprecedented revenue shortfall in its most important quarter.

Apple says it missed its own revenue projection by at least $4 billion.

There are a lot of factors, but one is clear: Apple's iPhones have gotten more expensive, and it's starting to hurt demand.

When Apple preannounced the bombshell that it expected to miss its own revenue target - by at least $4 billion - for the first time in 16 years, it provided a lot of reasons.

The primary reason given by Apple CEO Tim Cook was that new iPhones did not sell well in China during the holiday quarter because the economy is not doing well there.

But he also mentioned a strong dollar, supply constraints, and fewer smartphone subsidies from wireless carriers as reasons for an unprecedented shortfall in Apple's revenue.

One thing he didn't mention? That Apple raised prices for the iPhone across the board this fall. The least expensive new phone, the iPhone XR, is 7% more expensive than last year's entry-level new phone, the iPhone 8. That's in addition to releasing the most expensive smartphone ever, the iPhone XS Max, which starts at $1,100 and can be configured to cost as much as $1,459.

In fact, there's a simple solution for Apple's problems: It could release iPhones at lower prices to increase sales. It's basic economics - people buy more widgets as prices goes down.
Read more: Goldman Sachs called Apple's bombshell miss for the holiday quarter way back in November
If iPhone prices are eye-watering for Americans, they're even more expensive abroad, thanks to that strong dollar and prices that are often higher overseas than in the United States. For example, an iPhone XS costs 8,338 Chinese yuan. That works out to $1,220 for a phone that retails in the US at $999.

Analysts generally buy the fact that economic conditions in China declined quickly between November 1, when Apple said demand was good, and Wednesday, when the company lowered its guidance for the holiday quarter by billions of dollars. The Above Avalon analyst Neil Cybart estimated that the decrease meant about 7 million fewer iPhones sold than expected.

"While Tim Cook blamed a slowing China economy and trade tension, we maintain that in our opinion the iPhone average sales price is the biggest problem given uninspiring specs and rising competition in China and in Europe," Nicolas Baratte and Cherry Ma, analysts at the Hong Kong-based CLSA, wrote in a note on Friday.

"In particular, we think the Huawei P and Mate are a problem for Apple given similar hardware specs at 2/3rd or half the price," the analysts continued.

There are reasons to keep iPhone prices high, some analysts suggest.

"It's extremely easy to say Apple should just cut product pricing to boost demand," Cybart wrote on Thursday. "However, it's not clear how such a move leads to greater customer satisfaction and loyalty."

Skyrocketing average sales price

The average price of an iPhone has been growing prodigiously. In the third quarter of 2018, the average iPhone sold for $793, a massive rise from the $618 Apple said it cost a year ago.

(Going forward, Apple announced in November, investors won't have access to average selling price numbers.)

"The answer is absolutely" that average sales prices affect demand, Tom Forte, a senior research analyst at D.A. Davidson, told Business Insider, continuing: "Not only was I wrong on my optimism that higher ASP would offset weakness and result in better-than-expected sales performance, but they were too aggressive in their price increases."

Some analysts wonder whether Apple will see its average selling price decline going forward.

"We believe that focus should now shift to ASP decline potential in 2019," the Goldman Sachs analyst Rod Hall wrote on Thursday. "Weaker macro and [foreign exchange rates] may push consumers toward less expensive iPhone models."

Those less expensive iPhone models are the older models, which do not get heavily marketed and are facing sales bans in Germany and China because of the global legal battle with Qualcomm.

Even Apple's marketing now focuses on price, for the first time in memory. Apple's advertising now often highlights the iPhone XR for a price below its $749 retail price after factoring a trade-in device, suggesting that Apple knows its customers are price-sensitive.

Services as the bright spot

Apple did highlight some bright spots in its letter to investors: that products like online services, AirPods, Apple Watches, and Mac computers all reported record revenue. In fact, they grew by 19% annually.

But all of those products essentially require an iPhone. It's unlikely someone would buy cloud storage or Apple Music if they weren't already in Apple's ecosystem. AirPods and the Apple Watch basically don't work unless the customer already has an iPhone, and the Mac is a premium laptop that works best with an iPhone.

That's why Apple emphasizes it when the number of iPhone users remains growing. "Our installed base of active devices hit a new all-time high - growing by more than 100 million units in 12 months," Cook wrote in Wednesday's letter.

The installed base is the number that will continue driving all of these other products that Apple sells. And if Apple is serious about becoming a company that makes a lot of its money by selling online services, as it signaled in November, it needs the installed base to continue rising.

That means introducing lower-cost iPhones, some analysts believe.

"This year's iPhone XR is 7.5% more expensive than the 8," Forte said. "If we were having this conversation prior to the preannouncement, Apple still lacks in its product portfolio a low-priced smartphone to fully exploit emerging markets."

"This still shows there's a hole in the product strategy not having the lower-price device," he said. "But that hole might never get plugged. It might be their permanent strategy."

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The solution to Apple's problems is easy: Release a cheaper iPhone

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Apple blamed a collapse in China for what it expects to be an unprecedented revenue shortfall in its most important quarter. Apple says it missed its own revenue projection by at least $4 billion. There are a lot of factors, but one is clear: Apple's iPhones have gotten more expensive, and it's starting to hurt demand.

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The iPhone is at a crossroads. It's been four years since Apple first released its super-duper-wonderphone, and you don't have to be a fanboy to appreciate how thoroughly this single gadget has upended the tech industry. The iPhone wasn't the first smartphone, it wasn't the first touchscreen device, and it wasn't the first app-enabled mobile computer (indeed, the first iPhone didn't run apps). Still, the iPhone was something novel-a smart, intuitive, beautifully designed, futuristic-seeming gizmo that was immediately lapped up by consumers and wholly copied by rivals. For Apple, the iPhone has been a godsend. In 2010, the company reported $25 billion in revenue from the iPhone alone-that was about 40 percent of its total annual revenue-and the phone's growth shows no signs of slowing.

The trouble is, Apple's main rival, Android, also looks unstoppable. Andy Rubin, who heads up Google's phone division, just reported on Twitter that there are 500,000 "activations" of new Android devices every day around the world, and the number is growing by 4 percent per week. Some of these devices are tablet computers-where Android still lags far, far behind Apple's iPad-but the vast majority are phones, a sector where Android's share of sales far surpasses Apple's. According to the research firm IDC, Android's worldwide share of the smartphone market is about 40 percent, compared to around 16 percent for Apple's iOS. In the United States, Android has nearly 50 percent of the smartphone market, while Apple has 29.5 percent. (Android's share stateside declined by a couple points over the last year, mainly due to the introduction of the iPhone on Verizon.)

What's fueling Android's growth? Sure, it's a terrific operating system, and over the last year it's gotten lots of new apps, too. But in all sorts of ways, Android phones can't match the polish and power of the iPhone. The main reason that Android is capturing a bigger slice of the phone market is price. Every major American mobile carrier now offers at least a few Android phones for free with a contract. The iPhone 4, by comparison, sells for $199 with a contract (you can also get the 2009-era iPhone 3GS for $50 with a contract). Apple's prices look even steeper if you consider the market for "unlocked phones"-that is, phones that sell for full price, without a contract. A new, unlocked iPhone 4 will set you back $649. There are dozens of unlocked Android phones that sell for less than $200.

The numbers seem to mark a clear path for Apple: It needs to make a cheaper iPhone. And it needs to do it now.

But how? What would a cheaper iPhone look like, what would it do, and how would Apple make sure that such a device doesn't eat into its revenues? Tech pundits have been predicting the release of a low-priced iPhone for many years-this week, Chris Whitmore of Deutsche Bank told investors to expect Apple to add a cheap iPhone to its lineup this year. Whitmore, like many others, predicts that Apple will sell the low-priced phone alongside the standard iPhone rather than replace the expensive model. This makes sense when you consider Apple's strategy with the iPod. The iPod Mini, which the company released in 2004, was a smaller, cheaper version of the original. It quickly became Apple's best-selling music player. (The Mini was replaced with the Nano in 2005.)

Of course, an iPhone Mini wouldn't be a very good device. Apple was able to shrink its music player because the screen wasn't a big part of its utility. The iPhone, though, is a visual gadget, and reducing its screen size would make for a terrible experience. Because its screen will have to be the same size as the expensive iPhone, and because the screen is what makes the iPhone the iPhone, a cheaper version won't look very different from the expensive one. Apple could certainly add a few design cues to differentiate the two-it could make the cheap one thinner, or it could give it a plastic skin-but the main differences are likely to be internal: The cheaper iPhone might have a slower processor, less RAM, and less onboard storage space. Some wags predict that Apple's next full-fledged iPhone-presumably called the iPhone 5-will be able to access faster 4G networks, so that could be a another point of differentiation. The "iPhone lite," as TechCrunch's MG Siegler has taken to calling the mythical cheap iPhone, might only run on 3G networks.

Apple's goal, with such a device, would be to sell it at a price of between $200 and $300 without a carrier contract-less than half the price of an unlocked, full-fledged iPhone. This is certainly doable: Apple sells the iPod Touch, which is essentially an iPhone without a cellular radio, for $229. Since the components for adding a radio cost only $16, a $200 unlocked iPhone isn't a pipe dream. And if Apple can reach that price, it will see huge sales. Horace Dedieu, the smartest Apple analyst on the Web, points out that the vast majority of cell phones across the world are sold without a contract. (The United States and Canada are unique in selling most with a plan; a cheaper, unlocked iPhone could push a lot of people to ditch their mobile contracts, which will anger the carriers-but I doubt Apple cares much about the carriers.) What's more, growth in the smartphone business will come via the hundreds of millions of people who are expected to switch from dumb phones to smartphones over the next few years. A cheap iPhone that sells without a contract will be irresistible to many of these customers-it could boost Apple's sales by several hundred percent.

But there's a danger in this model, too. Because the cheap iPhone would be visually and functionally similar to the expensive iPhone, you'd have to imagine that many (if not most) customers who would otherwise have purchased the expensive phone will choose to go with the cheaper one. Financially, this wouldn't be a disaster for Apple-you can bet that it would make healthy profits off the cheap iPhone. It would, however, represent a fundamental shift to Apple's business model. So far, the iPhone has been all about profit, even at the expense of market share.

The other potential danger is that the cheap phone could fuel consumer disappointment. Apple markets the iPhone as the best phone anywhere. But how would it market a cheaper model-one that looks nearly identical to the expensive phone but does a lot less? The company would need to walk the tightrope of proclaiming the cheapie phone's amazingness without creating the expectation that it would do as much as a pricier iPhone. Maybe the tag line could be, "iPhone Lite. Relax-it's slower!"

Given the risks of releasing a cheaper iPhone, would Apple be willing to turn its mobile strategy on its head? Its history suggests two opposing theories. On the one hand, there's the Mac, where Apple decided to forget about market share and stick with profits. That led Apple to "lose" the PC wars, but it was a pretty good loss-Apple now makes more money selling a single Mac than HP does from selling seven PCs. The other path is what Apple did with the iPod-it relentlessly lowered cost and diversified its line-up, making sure that there was a music player for every budget. That worked out fantastically as well: At its peak about five years ago, the iPod represented more than half of Apple's revenue.

After weighing those two possibilities, I'm betting that Apple goes downmarket. It's not just because the financial opportunity in releasing a cheap phone seems too good to pass up. As Dedieu points out, Steve Jobs seems to regard Apple's Mac strategy to have been an enormous blunder. In 2004, Jobs told Newsweek that at "the critical juncture in the late '80s, when they should have gone for market share, [Apple's management] went for profits." He added: "They made obscene profits for several years. And their products became mediocre. And then their monopoly ended with Windows 95. They behaved like a monopoly, and it came back to bite them, which always happens."

If Android is the new Windows, then the path for Apple is obvious: It can't afford to rest on its profits any longer. A cheap iPhone has got to be around the corner.

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Cheap iPhone: Why Apple should create a downmarket version of its best-selling product.

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The iPhone is at a crossroads. It's been four years since Apple first released its super-duper-wonderphone, and you don't have to be a fanboy to appreciate how thoroughly this single gadget has upended the tech industry. The iPhone wasn't the first smartphone, it wasn't the first touchscreen device, and it wasn't the first app-enabled mobile computer (indeed, the first iPhone didn't run apps).

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A year after Apple made huge -- but pricey -- changes to its smartphone lineup with the iPhone X, it may finally have a redesigned, cheaper phone for the rest of us.

The company plans to host an event at 10 a.m. PT on Wednesday at the Steve Jobs Theater on its campus in Cupertino, California. During the event, it likely will introduce three new iPhones, according to media reports. Two of the models, rumored to go by iPhone XS and iPhone XS Max, will include all the new bells and whistles. But for once, the most intriguing model out of the trio may be the most affordable.

Apple is expected to introduce a device that looks like the iPhone X but uses cheaper components, like an LCD display instead of a more vibrant OLED screen, to keep the costs down, according to Bloomberg. It's rumored name, according to the publication, is the iPhone Xr. The publication said the new device will sport multiple colors and feature aluminum sides instead of stainless steel like the iPhone X.

It will reportedly feature a "near" 6.1-inch screen, which would make it larger than the iPhone 8 Plus, the iPhone X and its rumored successor, the iPhone XS -- a break in the typical dynamic that bigger automatically means more expensive.

This new model is a signal that while prices for super-premium smartphones like the iPhone X and Samsung Galaxy Note 9 are rising higher than ever before, even a company with as loyal a following as Apple needs to do more for the more budget-conscious crowd. The iPhone X may be a hit, but globally, Apple is starting to see its market share erode as more affordable options from the likes of Huawei, OnePlus and Xiaomi start to turn heads.

Let's face it, being an iPhone fan has been tough unless you were willing to fork over $999 -- or more -- for the iPhone X. Taking the budget iPhone SE out of the equation, if you wanted one of Apple's smartphones last year but couldn't splurge for the iPhone X, you were stuck buying the iPhone 8 or iPhone 8 Plus -- phones that sport a design first introduced in 2014. You also didn't get access to Apple's Face ID technology, the marquee new feature from last year.

This new, "budget" iPhone X-style phone isn't cheap, given its rumored $700 price tag, but it's a far cry from dropping a grand or more on the latest and greatest from Apple. The larger display and likelihood that it will also get Face ID makes this an attractive option for consumers not willing to go big on their next iPhone.

"It's a good way for Apple to get people with older devices, like the 6 and 5S, to upgrade," Creative Strategies analyst Carolina Milanesi said. "It will feel like they have a device that's modern because it will look like one of the new ones but not have the cost."

Apple declined to comment.

Tough competition

Apple, which became the US' first trillion-dollar company in August, has been soaring over the past few years. The company's fiscal fourth-quarter revenue projections indicate it's optimistic about the phones expected Wednesday.

While its phones have proven tremendously profitable, they're not ubiquitous around the world. Some of its phone rivals are seeing even bigger increases in device sales. In the June quarter, Huawei overtook Apple to become the world's second largest phone vendor, according to various analyst tallies.

The Chinese phone maker, which has all but been shut out of the US market, shipped 54 million handsets in the quarter, up 41 percent from the previous year, researcher Canalys said in August. Apple sold 41.3 million iPhones in that quarter, nearly flat compared with the previous year's 41.03 million.

"The importance of Huawei overtaking Apple this quarter cannot be overstated," Canalys analyst Ben Stanton said. "It is the first time in seven years that Samsung and Apple have not held the top two positions."

He added that Apple and chief rival Samsung both need to make their portfolio "more competitive," especially when it comes to price.

Not a low-cost phone maker

Aside from the , which uses older specs and a small body, Apple has shown a reluctance to round out its family of products. It would rather sell fewer phones at higher prices than ship millions of cheap devices.

In the fiscal third quarter that ended in June, the average selling price of its iPhones climbed to $724 from $606 a year ago. That means that a lot of us have been happy to go along with those big price increases.

Prices have gone from $649 to the entry level iPhone 7 in 2016 to $1,149 for the larger-capacity iPhone X last year.

Apple's rivals typically sell most of their devices for much cheaper. Samsung's smartphone average selling price totaled $373 in the second quarter, while Huawei's was $278, according to Canalys. But some of the cheaper phones Huawei has launched still have higher-end components.

Despite the cheaper iPhone option, Apple isn't going the route of its rivals. It's expected to push its iPhone pricing even higher for some models. Apple's two higher end models will sport crisper, pricier OLED displays, improved dual cameras, glass backs and stainless steel edges, Bloomberg said. One, the 5.8-inch model, won't have many visible changes but will pack a faster processor.

The other will have a 6.5-inch display, according to Bloomberg, making it one of the largest smartphones on the market. By comparison, Samsung's new Galaxy Note 9 has a 6.4-inch display. That device's biggest changes will be more noticeable in software, like the ability to look at content in apps side-by-side, the publication said. The larger phone likely will start at $999 -- or higher.

"Since the iPhone X has been the best selling iPhone this year, despite the $999 starting price tag, we believe Apple understands consumers are willing to pay for a superior device and user experience," Morgan Stanley analyst Katy Huberty noted.

Where's the iPhone SE?

Apple's past attempts with making less-expensive phones has yielded mixed results. It introduced the plastic and colorful in 2013, but it wasn't cheap enough to attract price-sensitive buyers nor flashy enough for everyone else. Apple never made a second version of its C device.

Samsung, which also faces pressure from lower-cost phone vendors, has been able to remain the top dog because of its well-rounded portfolio. On Friday, it said its mid-tier will cost $360 when it hits the US market on Sept. 14. It's just the latest in myriad products that cross a wide range of prices.

"Consumers are increasingly looking for innovative features and high-quality hardware in mid-tier mobile devices," Samsung said in a press release announcing the phone.

Apple has seen more success with the iPhone SE, Apple's smaller-screen, less expensive phone. The company released the 4-inch iPhone SE in March 2016. At the time, it was a throwback to Apple's older iPhone designs and was the option for people who wanted a smaller screen than the 4.7-inch iPhone 6. The following year, it boosted the storage options but kept everything else the same.

"Apple is due an overhaul at the low-end of its portfolio," Stanton said. "iPhone SE has undoubtedly reached end-of-life."

It's unclear when a successor to the iPhone SE may appear -- perhaps a surprise appearance on Wednesday? Until then, this new lower end iPhone X successor, as well as a discounted iPhone 8, may be the only legitimate budget options.

Being an Apple fanboy ain't cheap.

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Apple's rumored 'budget' iPhone X successor may be the most intriguing iPhone

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A year after Apple made huge -- but pricey -- changes to its smartphone lineup with the iPhone X, it may finally have a redesigned, cheaper phone for the rest of us. The company plans to host an event at 10 a.m. PT on Wednesday at the Steve Jobs Theater on its campus in Cupertino, California.