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Apple iPhone 14 global price increase in addition to the United States and China

On Nov. 6 (Bloomberg) — The price of Apple’s new flagship smartphone, the iPhone 14 series, is rising sharply for buyers in many countries as they deal with the strong dollar and exchange rate fluctuations, with only Chinese and U.S. consumers being fewer affected.

Apple’s new iPhone 14 series comes with a better screen, camera, and support for satellite communications, among other new features. Prior to the launch, many analysts had expected that Apple might raise the price of the latest iPhone models across the board due to ongoing supply chain challenges and inflationary effects. But in the U.S. and China, the price of Apple’s new models hasn’t gone up much compared to the iPhone 13 series.

However, for consumers in countries such as the United Kingdom, Japan, Germany and Australia, Apple’s new phones have seen significant price increases. For example, iPhone 14 starts at $799 in the U.S., the same price as iPhone 13, which was released last year. In the U.K., iPhone 14 starts at £849 (about $975), up about $90 from £779 (about $886) when iPhone 13 was released.

In Australia, iPhone 14 starts at A$1,349 ($904), compared to £1,349 ($872) when iPhone 13 was released; in Japan, iPhone 14 starts at ¥119,800 ($817), compared to ¥98,800 ($674) when iPhone 13 was released In Germany, the iPhone 14 starts at 999 euros (about $990) and the iPhone 13 starts at 899 euros (about $890) at launch.

This price difference is only for the entry-level models, with the higher-end models having a much larger price difference. For example, the iPhone 14 Pro Max is £150 ($170) more expensive in the UK than the iPhone 13 Pro Max was when it was released last year.

A

The reason Apple is raising the price of its phones in some countries has to do with exchange rate fluctuations. Basically, every currency in the world is depreciating against the dollar,” Luca Maestri, the company’s chief financial officer, said on the company’s fiscal fourth-quarter earnings call last week. The strong dollar is challenging us in a number of areas. Obviously, it makes our pricing in emerging markets more difficult, and also the conversion of those revenues back to the U.S. dollar has been impacted.”

While Apple reported its fiscal fourth-quarter revenue grew 8 percent to $90.15 billion, the company’s CEO Tim Cook contended that Apple’s revenue would have grown by double digits in the quarter if not for the strong dollar. The negative impact of foreign exchange fluctuations in the fourth fiscal quarter was more than 600 basis points,” Cook said. Without the exchange rate impact, we would have achieved double-digit growth.”

According to Maestri, currency exchange rates are a very important factor in Apple’s performance, both from a revenue and gross margin perspective. Apple does hedge its currency exposure “in as many places in the world as possible,” he said, but that protection is really starting to diminish as the company needs to continue to buy new contracts. He added that Apple also considers exchange rate conditions when launching new products, which has led to recent price increases.

While recent exchange rate fluctuations have led consumers in certain countries to pay higher prices for iPhones, there are some examples of Apple bearing some of that cost. in 2019, when the U.S. dollar also appreciated relative to other currencies, Apple adjusted prices in some foreign markets and reset them to levels comparable to what they would have been in local currency a year ago.

However, Apple did so as a result of lower sales due to the price increase. In Turkey, for example, the local lira fell 33 percent against the dollar in 2019, and Apple’s sales fell by $700 million. Cook said in an interview at the time, “We decided to reprice iPhone to be more in line with local prices from a year ago in an effort to help boost sales in those regions.”

But Apple said there has been no drop in demand in those markets in 2022. Maestri pointed to double-digit revenue growth in India, Indonesia, Mexico, Vietnam and other countries, even in local currency terms.

It’s important for us to look at the performance of these markets in local currency because it really gives us a better understanding of how our customers are responding to our products, how engaged they are with our ecosystem and the strength of our brand in general,” he said on the earnings call. We have to say, in that regard, we’re very pleased with the progress we’ve made in many markets around the world.”

The U.S. dollar has also been steadily rising against the Chinese yuan over the past six months, but there are some signs that demand for the new Apple iPhone in China may be waning. While Maestri highlighted Apple’s record revenue in Greater China in its fiscal fourth quarter, U.S. investment bank Jeffries recently released a research report that said sales of the four new iPhone 14 models in the first 38 days of availability in China were down 28 percent from sales of the iPhone 13 during the same period.

Apple is not the only company to acknowledge the impact of exchange rate fluctuations on its business and pricing decisions. McDonald’s reported that currency fluctuations caused its revenue to fall by 7 percentage points, resulting in a 5 percent year-over-year revenue decline. Without the impact of exchange rates, its revenue would have grown 2 percent. McDonald’s Chief Financial Officer Ian Borden said on an earnings call last week that 60 percent of the company’s revenue comes from outside the U.S., and apparently that revenue has decreased after being converted to U.S. dollars.

Currency fluctuations are hitting P&G harder and harder. The consumer products company reported a 6 percent decline in net sales due to unfavorable exchange rate effects, compared with a negative exchange rate impact of 3 percent and 4 percent in the previous two quarters. The company had to raise its expectations for a negative exchange rate impact this year to $1.3 billion, with Chief Financial Officer Andre Schulten saying on the company’s earnings call last week, “Exchange rates continue to be unfavorable to us.”

Coca-Cola Chief Executive James Quincey said the strong dollar has been a negative factor this year, with about 80 percent of the company’s profits coming from outside the United States. Quincey expects that next year is likely to have an even greater negative impact. Like Apple, Coca-Cola hopes to offset some of the impact of currency fluctuations by raising prices.

So far, Coca-Cola has not reported a drop in demand due to higher prices, but Quincy acknowledged that many potential consumer concerns are on the horizon. We do see that consumers are beginning to react in the same way they often did during the recession, by delaying purchases of non-essential items and perhaps turning to more private label or discount channels,” he said. The impact of the market’s declining purchasing power is becoming apparent.”

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Threza Gabriel
Threza Gabrielhttps://www.techgoing.com
TechGoing is a global tech media to brings you the latest technology stories, including smartphones, electric vehicles, smart home devices, gaming, wearable gadgets, and all tech trending.
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