Apple

Low-Priced iPhone, China Discounts Could Limit Apple's Losses

Apple store in China

Apple Inc.’s discounts couldn’t come at a better time.

In China, JD.com, the country’s largest eCommerce site, is selling the iPhone 11 with 64GB for 3,299 yuan or $466 — a discount of 2,200 yuan, a whopping $310, or 40 percent off its original price of a few months ago.

On top of that, Apple’s new low-price SE model was priced at $399 before the COVID-19 pandemic took hold.

Analysts say the reopening Apple’s stores in China while its U.S. stores stay shuttered during the coronavirus pandemic could protect the California technology giant from record losses, Reuters reported. China accounts for 15 percent of Apple’s sales.

“Apple is better positioned than most to experience a rapid recovery in a post COVID world,” Amit Daryanani, an Apple analyst from Evercore, said in a research note. “We see demand as pushed out, not canceled.”

The recent launch of the new, lower priced iPhone SE online, suggests Apple is getting back to business after weeks of shutdown earlier this year, Daryanani added.

In January, Apple reported record revenues in the first quarter that ended on Dec. 28. It posted revenue of $91.8 billion, a 9 percent increase from the same quarter one year ago. International sales accounted for 61 percent of the quarter’s revenue as sales of iPhones, wearables and services drive profitability, the company reported.

Later this week, Apple is expected to release its second-quarter results. But analysts say they expect Apple to see a 6 percent decrease in revenue and an 11 percent dip in net income, according to Refinitiv.

A low-priced iPhone SE could lure Apple cellphone owners to buy a newer device, something they might not have considered, Nicole Peng, a researcher at Canalys, told Reuters.

“People want to avoid uncertainty in a downturn,” she said. “Having a brand like Apple that can showcase quality and make people less worried about breakdowns or after-sales service can bring in buyers.”

While Apple still expects to unveil its latest iPhone versions in September, it has trimmed summer production by 20 percent given weakened demands as a result of COVID-19. Sources told the Wall Street Journal four new iPhone versions in three sizes are being released, some equipped with 5G.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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