Lucky Number 8?: The $1,000 Price Tag Dampens iPhone Excitement in China

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REUTERS/Aly Song

In america, analysts are certain that a price will have a dramatic effect. Around four out of five of the consumers who previously bought the top end model would be eager to do regardless of the purchase price jumpanalyst and veteran Apple watcher Gene Munster of Loup Ventures.

One effect of Apple’s costliest phone thus far will be the increase of sales on credit.

Released at Mon, 11 Sep 2017 18:34:47 +0000

BEIJING (Reuters) – Apple Inc (AAPL.O) will launch an anticipated “iPhone 8” on Tuesday, hoping the amount’s auspicious connotations in China will help turn around fortunes in the world’s largest smartphone market.
Apple itself has launched an instalments program in China supported by three banks that were state-linked.

The success of Apple’s next iPhone in China is crucial for its Cupertino-based company, which has seen its once-coveted phone slide into fifth place in China behind offerings from local rivals Huawei Technologies Co Ltd [HWT.UL], Oppo, Vivo and Xiaomi Inc [XTC.UL].
Fenqile, a platform supported by Tencent Holdings Ltd (0700. HK) allowing users to pay in instalments, said shoppers purchasing iPhones on the site had increased alongside rising costs – spiking in the second quarter of the year.
Greater China, which for Apple includes Taiwan and Hong Kong, accounted for approximately 18 percent of iPhone earnings in the quarter ended in July, which makes it the business’s top market after Europe and the United States. Yet those earnings have been decreasing and are down 10 percent from a year earlier with growth in all regions.

“They need to still provide something for each market. They still will have that,” Munster said.
Chen said she might wait for the new phone’s successor, when prices will collapse. “It’s a nice number to hear, but there’s no rush.”
Beyond that, Apple is expected to cover price points by retaining some sort of model similar. That is very likely to ensure iPhone customers remain within the Apple ecosystem if costs on models grow.

“The weapons of competition are raised phone subsidies, discounted phone payment programs and device trade-in offers,” BTIG analyst Walter Piecyk wrote in a note to clients. “Promotions are already on the rise for the Samsung phones released earlier this year.”
The 7 suffered from the perception that it was too similar to earlier models. This time, despite discussion of innovative touch screen, charging and facial recognition technologynetizens are yet to replicate around iPhone launches to the mania.
“I will wait for a drop in price, it is too expensive,” said Angie Chen, 23, a project manager in Nanjing and iPhone 6 owner.

$1,000 price tag dampens iPhone enthusiasm in China

“If it is under $1,100 then I will buy it,” said Liu Song, 29, who works for a fintech startup in Beijing.
Eight is the luckiest number in China because it sounds like the phrase meaning “to get wealthy”.
Services backed by Alibaba Group Holdings Ltd (BABA.N) and JD.com Inc (JD.O) have also introduced features this year aimed at price-conscious smartphone buyers, such as flexible payment solutions and secondhand smartphone rentals.
Along with the iPhone’s share of China shipments fell to 9 percent in January-June, down from 14 percent in 2015, revealed data from consultancy Counterpoint Research.
“We will continue to stock the more affordable models or we will not sell much,” he said.
While the iPhone 6 shot China by storm in 2014, models since have received a more muted response.

Wang Yang, who runs a smartphone store in the largest market of Beijing, said he expected purchases online this time, as payments are made by customers by instalment.
Reporting by Cate Cadell; Additional reporting by Stephen Nellis in San Francisco; Editing by Rosalba O’Brien and Christopher Cushing
“Apple really needs to launch a very innovative product this time around,” said Mo Jia, Shanghai-based analyst at Canalys. However, the rising clout of local rivals would nevertheless make life tough for the U.S. firm, he said.
The model is tipped to have a price tag of $1,000, compared with less than $800 for the iPhone 7 Plus. That is unlikely to generate a significant dent in U.S. sales, analysts say, but might have a larger impact in China, where the cost is roughly double the average Chinese monthly salary.

Another variable for U.S. revenue will be reductions from carriers, which may elect to utilize the buzz around the new iPhone launch to lure customers away from their competitors by offering deals that would soften the blow of higher costs.
Mentions of “iPhone 8” on popular Chinese social networking platform Weibo – an indicator of consumer attention – were running slightly ahead of the similar period prior to the iPhone 7 launch, but were far more muted than with the iPhone 6.
Apple declined to comment on supply, price or the new phone.

 

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