Apple’s CEO Tim Cook published a letter to investors warning of lower than expected first-quarter earnings. The main reasons for the sales warnings are as follows:
- Challenges in China market
- Battery replacement programme causing less people to upgrade
This is shocking from Apple as the cuts in sales forecast is a first in 15 years. Apple’s stock price tumbled by almost 9% since this news and Apple’s market capitalisation has fallen by more than $300 billion ever since it became the first public company to be valued above $1 trillion back in October 2018.
Personal opinion:
This is a wake up call for Apple. I’m actually glad this is happening. People are finally able to speak with their wallets and let Apple know that they are charging ridiculous prices for their phones. Seriously charging S$1.6k for a phone is insane. I personally use all things Apple and still rocking the iPhone 6S because the new phones are just too expensive. Also, phones these days are good enough to last at least 2 – 3 years, so people are less willing to upgrade unless there is a huge pull factor. Even if there is, the price is a huge turn off. Andriod phones these days are getting better and cost much less than iPhones.
Apple could do 2 things going forward – (1) Reduce the pricing on their phones or (2) Introduce new and novel features or design. The S$1.6k pricing didn’t stop people from paying but I guess it was because of the huge change in design and also the 10th anniversary that made people more willing to shell out cash. But the XS and XR paints a whole different story. Going forward, I do hope Apple cuts their pricing. But Apple being Apple, will that ever happen