Connect with us

Technology

Wedbush’s Dan Ives says Apple needs to slash prices in China

Editor

Published

on

[ad_1]

When it comes to China, Apple might be facing a “code red” situation and may need to respond to it equally dramatically with something it rarely does — cutting prices on recently-launched products.

For Apple to successfully transform itself into a services company, as CEO Tim Cook been talking about, it needs to maintain its current base of customers, said Dan Ives, an analyst who covers the company for Wedbush, said in a new research note. But it risks losing a significant chunk of its customer base in China, because it priced its new iPhone XR too high, he said.

To right its ship, Apple is going to need to “significantly” cut the price of the XR in coming months — perhaps by as much as 20%, Ives said.

“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 in China, in our opinion,” Ives said. “This is a smart and necessary strategy.”

Apple representatives did not respond to an email seeking comment about Ives’ report.

Read this:Hey Tim Cook, there’s a simple solution to your iPhone sales problem

Some thought the XR would be a big hit

Apple introduced the XR last fall as a lower-cost alternative to its flagship XS models. It features many of the same features, but has a less costly screen and a lower price. While the XS models start at $1,000, the XR starts at $750. When it launched, some observers expected the XR to be a breakout hit.

Apple launched the iPhone XR last fall as a lower-cost alternative to its flagship XS phones.
Justin Sullivan/Getty Images

Instead, many consumers appear to be rejecting the XR as too costly. Apple has reportedly cut back on production of the XR repeatedly since it launched. Earlier this month, the company warned that its holiday-quarter sales would fall short of its forecasts and blamed weak iPhone sales, particularly in China.

Ives pointed a finger at the XR for that shortfall. There the device has a base price of RMB 6,499, which is about $960.

“As we have discussed with investors, it has been Apple’s pricing hubris on iPhone XR that was the major factor in the company’s December earnings debacle,” said Ives, who remains a bull on Apple’s stock, with an “outperform” rating and a $200 price target.

Many analysts, including Ives, believe that the future for Apple is in selling services to owners of its devices. The company’s services segment has been one of its fastest growing businesses in recent years and such offerings as Apple Music, iCloud storage, and the money Google pays Apple so its search engine is the default for the iPhone. For its services segment to continue to grow, Apple will need to at least maintain its current user base, Ives said.

Apple needs to sell iPhones to drive demand for its services

That’s a chronic challenge. Smartphone owners tend to replace their devices every two to three years, and when they do, some use it as an opportunity to switch the kind of device they own from an iPhone to an Android device, or vice versa. Apple’s customers have tended to be very loyal, but its mistake in pricing the XR could test those ties, particularly in China, Ives said.

Some 350 million iPhones are due to be replaced within the next year to 18 months, he said. Of those about 60 to 70 million are owned by Chinese consumers, he said. The danger for Apple is that those customers, because of its high prices, don’t wait longer to buy their next device but buy a cheaper device from a competitor instead. That’s why it’s crucial for the company to cut its prices, he said.

“If the installed base declines in China, Apple will face an uphill battle in the region for years,” Ives said.

He suggested that Apple could boost sales of the XR by cutting the price to about RMB 5,200, or about $768. Reports out of China in recent days indicate that some retailers are already slashing their prices on the XR and other iPhone models.

The price cuts could worry already nervous investors, Ives acknowledged. Some may fret that Apple will take a further revenue hit from such reductions or that it would lose its image as a luxury brand. But such considerations aren’t as important as maintaining its user base, he said.

Cutting prices “is a smart and necessary strategy for Apple as this is an installed base story going forward,” he said. The growth of its services business, he added, “will be driven off that premise for the next decade, with China a key ingredient in Apple’s future recipe for success.”

[ad_2]

Source link

قالب وردپرس

Technology

More groups join in support of women in STEM program at Carleton

Editor

Published

on

By

OTTAWA — Major companies and government partners are lending their support to Carleton University’s newly established Women in Engineering and Information Technology Program.

The list of supporters includes Mississauga-based construction company EllisDon.

The latest to announce their support for the program also include BlackBerry QNX, CIRA (Canadian Internet Registration Authority), Ericsson, Nokia, Solace, Trend Micro, the Canadian Nuclear Safety Commission, CGI, Gastops, Leonardo DRS, Lockheed Martin Canada, Amdocs and Ross.

The program is officially set to launch this September.

It is being led by Carleton’s Faculty of Engineering and Design with the goal of establishing meaningful partnerships in support of women in STEM.  

The program will host events for women students to build relationships with industry and government partners, create mentorship opportunities, as well as establish a special fund to support allies at Carleton in meeting equity, diversity and inclusion goals.

Continue Reading

Technology

VR tech to revolutionize commercial driver training

Editor

Published

on

By

Serious Labs seems to have found a way from tragedy to triumph? The Edmonton-based firm designs and manufactures virtual reality simulators to standardize training programs for operators of heavy equipment such as aerial lifts, cranes, forklifts, and commercial trucks. These simulators enable operators to acquire and practice operational skills for the job safety and efficiency in a risk-free virtual environment so they can work more safely and efficiently.

The 2018 Humboldt bus catastrophe sent shock waves across the industry. The tragedy highlighted the need for standardized commercial driver training and testing. It also contributed to the acceleration of the federal government implementing a Mandatory Entry-Level Training (MELT) program for Class 1 & 2 drivers currently being adopted across Canada. MELT is a much more rigorous standard that promotes safety and in-depth practice for new drivers.

Enter Serious Labs. By proposing to harness the power of virtual reality (VR), Serious Labs has earned considerable funding to develop a VR commercial truck driving simulator.

The Government of Alberta has awarded $1 million, and Emissions Reduction Alberta (ERA) is contributing an additional $2 million for the simulator development. Commercial deployment is estimated to begin in 2024, with the simulator to be made available across Canada and the United States, and with the Alberta Motor Transport Association (AMTA) helping to provide simulator tests to certify that driver trainees have attained the appropriate standard. West Tech Report recently took the opportunity to chat with Serious Labs CEO, Jim Colvin, about the environmental and labour benefits of VR Driver Training, as well as the unique way that Colvin went from angel investor to CEO of the company.

Continue Reading

Technology

Next-Gen Tech Company Pops on New Cover Detection Test

Editor

Published

on

By

While the world comes out of the initial stages of the pandemic, COVID-19 will be continue to be a threat for some time to come. Companies, such as Zen Graphene, are working on ways to detect the virus and its variants and are on the forefronts of technology.

Nanotechnology firm ZEN Graphene Solutions Ltd. (TSX-Venture:ZEN) (OTCPK:ZENYF), is working to develop technology to help detect the COVID-19 virus and its variants. The firm signed an exclusive agreement with McMaster University to be the global commercializing partner for a newly developed aptamer-based, SARS-CoV-2 rapid detection technology.

This patent-pending technology uses clinical samples from patients and was funded by the Canadian Institutes of Health Research. The test is considered extremely accurate, scalable, saliva-based, affordable, and provides results in under 10 minutes.

Shares were trading up over 5% to $3.07 in early afternoon trade.

Continue Reading

Chat

Trending