14 DAY TRIAL // Apple has recently discounted 2017 and 2018 iPhone models in China in an attempt to deal with the slow sales in the country, and now analysts believe this is just the beginning of a longer series of price cuts.
An investor note sent by Wedbush to clients and seen by 9to5mac suggests Apple has no other option in the long term given the increasing competition from local companies like Huawei and Xiaomi.
Furthermore, the analysts emphasize that Apple does not afford to lose more users in China.
“In our opinion Apple is facing a “code red” situation in China and the right pricing strategy around XR and future versions will be key to putting a ring fence around the core installed base in the region,” the analysts said.
“With lower priced competition from all directions with Huawei and Xiaomi front and center, Apple needs to make sure that over the next few quarters they do not lose any current iPhone customers and thus speaks to the more significant price reductions on the way.”
Increasingly focused on services
While Apple hasn’t said anything about new discounts for iPhones, the company recently decided to cut production of new models, mostly as it anticipates the slower sales to continue throughout 2019.
However, the analysts believe that Apple will continue to invest big in services, as they become one of the main cash cows for the company.
“We believe a standalone subscription video content service from Apple is on the horizon for the next year; however the company is playing from behind the eight ball in this content arms race with Netflix, Amazon, Disney, Hulu, and AT&T/Time Warner all going after this next consumer frontier,” they say.
The best way to go is an acquisition in this market, the investor note also reads, pointing to companies like Sony Pictures, A24, and Lionsgate as possible targets for the tech giant.