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iPhone Sales Slowed, So Now What?

iPhone Sales Slowed, So Now What?

Over the past 24 hours, Apple Inc. (NASDAQ: AAPL)'s share price has fallen more than 6 percent as investors digested the company's lackluster fourth quarter results. While the company's cash coffer remains impressive, iPhone sales grew very little, sparking a hot debate as to whether or not Apple has come to the end of a period of high growth.

With the stock on the decline, traders are wondering what the tech giant is planning in the coming year.

The Price Debate

Following Apple's earnings report, traders began to debate just how the company should proceed. Dwindling iPhone shares are to be expected— the market for the devices has become saturated and model updates are offering fewer and fewer new features to entice consumers to upgrade each year.

Related Link: Apple: The Aftermath

However, some say that in order to counter slowing sales, Apple may have to drop its prices. The company has always sold its products for a premium, relying on branding and advertising to position itself as being worth the extra cost, but now the firm may have to give up some of those margins in order to reignite growth.

Changing Environment

Many are attributing the iPhone's disappointing sales to the shifting landscape of mobile devices. Initially, wireless carriers offered their customers hefty subsidies on particular phones in an effort to get them to sign up or continue with service. For that reason, people were less concerned with the iPhone's significant price premium.

Related Link: Do Apple And Xiaomi's Numbers Bode Poorly For China's Smartphone Market?

However, many carriers have begun to move away from that model, opting instead to allow customers to buy their phones outright. If that trend continues, it may weigh on sales as many people may be unwilling to pay double in order to buy an Apple over a competitor like Samsung or HTC.

New Phone New Direction

Apple is due to release its latest iPhone model this year, and its pricing will speak volumes about how the company plans to move forward. Although CEO Tim Cook said that lowering prices isn't the answer, many are expecting to see the latest version come out at a more affordable price. The new phone will be smaller than the iPhone 6 and 6S, which means it could be sold as a cheaper option.

Posted-In: iPhone iPhone 7 MarketwatchNews Tech Best of Benzinga


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