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Apple to face iPhone pricing issue during transition to 5G
Source: DIGITIMES   Editor: Helan   Update Time :2018/10/10 16:21:01

With the global communications industry beginning to migrate from 4G to 5G from 2019 onwards, Apple may find it difficulty to determine its iPhone product mix and pricing strategy, according to sources from Taiwan's handset supply chain.

Although most telecom operators are unlikely to officially kick off 5G commercial operations until 2020, handset vendors including Samsung Electronics, Huawei, Xiaomi, Oppo and Vivo will be eager to release 5G smartphones in 2019, the sources asserted.

But it remains to be seen whether Apple will also roll out 5G iPhone devices next year and adjust its pricing strategy, commented the sources.

Apple has maintained a policy of launch new iPhone models every year, but it would be quite pointless for the US-based vendor to continue to release new 4G models carrying high prices in late 2019, when competitors' 5G phones are already available at lower prices, argued the sources.

Apple may move in line with fellow vendors and roll out 4G/5G dual-mode smartphones in 2019, upholding its current higher pricing strategy with its first 5G iPhone available starting possibly at US$1,299.

Of course, Apple may also apply the same policy of lower the prices of the current iPhone lineup when it launches the 5G models, as it did for the iPhone X and iPhone 8 in 2018 and for iPhone 6s and Phone 7 in 2017. But such a practice might undermine the strength of its 5G phones.

There is also a possible alternative: Apple might roll out an entry-level 4G/5G lineup in 2019 available at US$899-999 in order to enhance its deployment in the 5G sector, suggested the sources. But then this alternative might stave off the sales momentum for the iPhone XR, XS and XS Max, affecting overall shipments of iPhone devices, said the sources.

But total shipment volume might not be a crucial factor for Apple to decide its pricing for 5G phones as it has been able to maintain or ramp up its profits leveraging high product prices although overall iPhone shipments have become stagnant.

The release of the iPhone X was rather impressive, but shipments of the iPhone X accounted for less than 30% of total iPhone shipments in the latest three quarters, and that Apple was able to maintain a 15% market share globally during this period thanks to brisk sales of the iPhone 6s and iPhone 7.

As a result, the forthcoming iPhone XR is likely to be the major force driving overall iPhone shipments in 2019 and is likely to account for 70% of combined shipments of the iPhone XS, XS Max and XR, estimated the sources.

It remains to be seen how Apple is going to handle its produce mix and pricing strategy during the transition from 4G to 5G next year.

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