Apple lowers price of iPhone XR in Japan By Fox Business
CHARLES: DOUG SCHOEN, GREAT SEEING YOU. >> CHARLES, ALWAYS. CHARLES: APPLE SLASHING ITS IPHONE XR PRICES IN JAPAN. JOININGS US NOW, CONCERN JOINING US NOW, GENE MUNSTER. FIRST OF ALL, APPLE LAUNCHED ALL OF THESE MODELS, LESS EDUCATION PENSIVE MODELS ALL AT THE SAME TIME. IN RETROSPECT, DOES THAT LOOK LIKE IT WAS A BIG MISTAKE? >> I DON'T THINK SO, AND WHAT THEY'VE BEEN DOING OVER THE PAST FOUR YEARS, CHARLES, IS TRYING TO GIVE A LITTLE SOMETHING FOR EVERYBODY.
AND SO THE BREADTH OF THE PRODUCT HAS BECOME MUCH WIDER, AND THEY NEEDED TO DO THAT TO COMPETE AGAINST LOWER PRICE ANDROID PHONES AND -- SO I DON'T THINK THEY MADE ANY MISTAKE. I THINK THEY'RE BEING VERY THOUGHTFUL ABOUT THE PRODUCT LINE, AND I THINK SOME OF THESE DATA POINTS THAT ARE COMING OUT RELATED TO THE POTENTIAL DEMAND, I THINK, ARE A LITTLE BIT MISPLACED. I'VE TRIED TO READ SOME OF THESE TEA LEAVES AND FOUND IT IS A DANGEROUS SUBJECT ESPECIALLY WHEN YOU'RE THIS EARLY IN THE QUARTER. I THINK THESE DATA POINTS ARE MORE RELEVANT WHEN YOU GET TO THE END OF A QUARTER LIKE THE END OF DECEMBER. CHARLES: RIGHT.
WE ARE ACCUSTOMED TO THESE STORIES, THERE'S ALWAYS A STORIES OF SOMEHOW AN APPLE SUPPLIER BEING IN TROUBLE. CONSEQUENTLY, THE STOCK TAKES A SHORT-TERM HIT, IS AND PEOPLE LOOK BACK LATER AND SAY, GOLLY, I WISH I HADN'T LISTENED TO THE SCUTTLEBUTT. ONE OF THE THINGS THAT'S WORKING IS AVERAGE SELLING PRICE. IT'S GONE UP DRAMATICALLY. MAYBE THEY'RE TAKE THING A SMALL HIT TO OVERALL SALES, BUT IS IT MORE IMPORTANT FOR THEIR MARGINS THAT THEY KEEP THIS AVERAGE SALES PRICE GOING UP? ONCE THAT STALLS AND PERHAPS MAYBE EVEN VOLUME STALLS, THAT COULD BE A TERRIBLE ONE-TWO HIT TO THE COMPANY.
>> AVERAGE SELLING PRICES HAVE BEEN THE BIG WIN FOR APPLE OVER THE PAST YEAR, THAT'S EXACTLY RIGHT. THEY'VE GONE FROM CALL IT THE HIGH 600 TO THE HIGH 700s ON AVERAGE. AND THAT DOES CREATE THE QUESTION ABOUT HOW DO YOU START TO THE ANNIVERSARY SOME OF THOSE PRICE INCREASES, HOW DO YOU KEEP THIS GROWTH STORY GOING. I THINK, SURPRISINGLY, THERE'S STILL MORE UPSIDE TO THESE PRICES. PART OF THE REASON IS MOST PEOPLE, CALL IT THREE-QUARTERS OF iPHONE OTHER THANS GLOBALLY, BUY THEIR PHONES ON AN INSTALLMENT BASIS.
SO THE DIFFERENCE BETWEEN $1,000 PHONE AND A $700 PHONE IS ABOUT $10 A MONTH. AND THIS NEW IDEA -- SO I THINK THAT MY TAKE IS YOU'RE EXACTLY RIGHT. IF THEY CANNOT CONTINUE TO MOVE PRICES HIGHER OVER THE NEXT FEW YEARS, THAT'S A PROBLEM. BUT I SUSPECT THEY WILL BE SUCCESSFUL IN DOING THAT. CHARLES: ALL EYES ON THAT AND, OF COURSE, NOT BREAKING OUT THE SALES, I THINK, IS SOMETHING THAT'S GOING TO GNAW AT WALL STREET FOR A WHILE.
I DO WANT TO SWITCH GEARS, GENE, AND I'VE GOT TO ASK YOU ABOUT FACEBOOK. IT'S BEEN PRETTY ROUGH ON THIS COMPANY, BUT CEO MARK ZUCKERBERG SAYS HE HAS NO PLANS TO GO. WHAT DO YOU THINK? >> TOUGH YEAR FOR FACEBOOK. NOT ONLY FROM THE HEADLINES, BUT ALSO THE PERFORMANCE OF THE COMPANY AND THE STOCK. I THINK THAT ZUCKERBERG IS STILL THE RIGHT PERSON TO -- HE KNOWS THE COMPANY BETTER THAN ANYBODY, AND I THINK IT'S EVEN MORE IMPORTANT FOR HIM TO BE AT THE HELM, BECAUSE I THINK IT'S GOING TO GET MORE DIFFICULT FOR FACEBOOK TO RETAIN SOME ADVERTISERS.
THERE ARE TWO MAJOR TRENDS WORKING AGAINST THE COMPANY. ONE IS IT'S BECOMING MORE CLEAR THAT THE COMPANY USES REALLY GETS INTO PEOPLE'S EMOTIONS TO PROPEL ENGAGEMENT. YOU THINK ABOUT ALL THE POLITICAL CONTENT ON FACEBOOK, AND THAT CREATES A BRAND AROUND FACEBOOK THAT ISN'T VERY APPEALING TO ADVERTISERS. CHARLES: RIGHT. >> AND SEPARATELY, MOST PEOPLE DON'T FEEL GOOD ABOUT THEMSELVES AFTER THEY USE INSTAGRAM OR FACEBOOK.
I THINK THAT COULD BE A PUSHBACK. IT'S IMPORTANT THAT ZUCKERBERG'S AT THE HELM DURING THIS PERIOD. CHARLES: I AGREE. PLUS, HE JOINS 60% OF THE VOTING SHARES. GENE, ALWAYS GREAT TALKING TO.
Source : Fox Business
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