Apple’s move to cut prices on the iPhone 11 in China and the release of budget iPhone SE could give the company an advantage over rivals as consumer electronics companies face plummeting demand related to the coronavirus pandemic.
Sales of Apple’s iPhone were up 21% in China last month compared with a year ago, and iPhone sales were up more than 300% from the month before. So far, China is the only major market where the company has been able to reopen all of its stores.
China accounts for about 15% of Apple’s total revenue.
“Apple is better positioned than most to experience a rapid recovery in a post COVID world,” Amit Daryanani, an analyst at Evercore, said in a research note. “We see demand as pushed out, not canceled.”
Earlier this month, the 64GB version of the iPhone 11 was selling for about 4,999 yuan ($708) on JD.com, about $70 less than usual. Popular retailers Suning and Guomei were also offering discounts.
Apple previously gave Chinese retailers little discretion in setting prices, but last year several online retailers began to cut prices of some iPhone models, a move that Apple chief executive officer Tim Cook later said helped sales.
Apple launched its low-cost iPhone SE 2020 in China on April 20. A 64GB version of the device sells for $399 and could appeal to consumers wary of the stability of the economy in the wake of the pandemic, Canalys analyst Nicole Peng said.
“People want to avoid uncertainty in a downturn,” Peng said. “Having a brand like Apple that can showcase quality and make people less worried about breakdowns or after-sales service can bring in buyers.”
The company is expected to report a fall in revenue of 6% and a fall in income of 11%, according to analyst estimates compiled by Refinitiv.
Apple reports second-quarter earnings on Thursday.
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