Apple to offer lower cost iPhone in 2020 to draw more customers - report

Sales of the iPhone dropped 11.8 per cent year-on-year to $25.9bn in the third quarter

A slowing Chinese economy has hit Apple's bottom line. Bloomberg
A slowing Chinese economy has hit Apple's bottom line. Bloomberg

Apple will introduce a lower cost iPhone in 2020 to compete with mid-range smartphones from Samsung and Huawei, according to a media report.

“With its share of the smartphone market slipping, Apple plans to launch a lower-cost iPhone next spring to win customers in emerging markets,” Japanese newspaper Nikkei Asian Review reported.

The new model would be Apple's first lower-cost smartphone since the launch of the iPhone SE in 2016, which started at $399 (Dh1,466).

Apple’s cheaper iPhone SE enjoyed strong sales in emerging markets like China and India, with the company selling nearly 30 million units in 2016, but it stopped manufacturing the phone in September last year.

The decision to offer a cheaper iPhone has come at a time when the Cupertino-based company is going through one of the toughest phases in its recent history.

Sales of the iPhone dropped 11.8 per cent year-on-year to $25.9 billion in the third quarter, the company said. For the first time since 2012, Apple generated less than half of its total quarterly revenue from sales of the iPhone – a sign the company needs to rethink its strategy around its flagship device.

The size of the new model will be around 12 centimetres and share most of the same hardware as its more expensive counterparts, the report said.

Global smartphone sales are set to fall by nearly 2.5 per cent year-on-year in 2019, according to US-based research firm Gartner.

This would be the second year running that smartphone sales declined, following a more than 5 per cent yearly slump in 2018 - the first time annual deliveries fell worldwide.

With a fifth of global market share, Samsung retained its position as the top smartphone seller in the second quarter of this year, followed by Huawei and Apple with 15.8 and 10.5 per cent, respectively, Gartner said.

Analysts said a weaker Chinese economy was hitting Apple's bottom line. China's domestic market continues to be challenged as overall consumer spending on smartphones has fallen, according to the International Data Corporation.

A low-cost iPhone could help Apple attract more customers in China. Greater China contributed 18 per cent to Apple’s overall revenue in its 2018 financial year. However, its contribution fell more than 4 per cent year-on-year in the third quarter of this year at $9.2bn of total sales.

Apple is expected to announce upgrades to the Apple Watch, the iPhone and its computers on September 10.

Published: September 4, 2019 03:47 PM


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