iPhone 14 prices increased in all but these countries

iPhone 14 prices increased in all but these countries

At this time, there is a significant fluctuation in the dollar exchange rate in many regions. For this reason, the price of Apple’s new flagship smartphone, the iPhone 14 series is going up sharply. Despite the strong increase in other regions, Apple is doing its best to keep the price stable in two regions. iPhone 14 series prices remain the same in China and the US. These are Apple’s the largest markets. The Chinese smartphone market is the largest in the world. The United States, on the other hand, is the third largest market in the world.

iPhone 14
Source: MacRumors

Apple’s new iPhone 14 series comes with better displays, cameras, and support for satellite communications, among other new features. Before the launch, many analysts expected Apple to raise prices across the board for its latest iPhones due to ongoing supply chain challenges and inflationary impacts. But in the US and China, Apple’s new models haven’t gone up much in price compared to the iPhone 13 series.

However, for consumers in countries like the UK, Japan, Germany and Australia, the prices of new Apple phones have risen sharply.

USA

For example, the iPhone 14 starts at $799 in the US, the same price as the iPhone 13 released last year.

United Kingdom

In the UK, the iPhone 14 starts at £849 (~$975) and the iPhone 13 starts at £779 (~$886) at launch, an increase of around $90.

Australia

In Australia, the iPhone 14 starts at AU$1,349 (around $904) and the iPhone 13 starts at £1,349 (around $872) at launch.

Japan

In Japan, the iPhone 14 starts at 119,800 yen (about $904). The iPhone 13 started at 98,800 yen (about $674) at launch.

Germany

In Germany, the iPhone 14 will start at 999 euros (around $990) and the iPhone 13 will start at 899 euros at launch (around $890).

This price difference is only for the entry-level models, with the higher-end models having even bigger price differences. The iPhone 14 Pro Max, for example, is £150 (around $170) more expensive in the UK than it was when the iPhone 13 Pro Max launched last year.

Reason for the price increase of the iPhone 14

The reason why Apple raises the price of mobile phones in some countries is related to exchange rate fluctuations. “Basically all currencies in the world are depreciating against the dollar,” Chief Financial Officer Luca Maestri said on the company’s fourth-quarter earnings call last week. The field presents challenges for us. Obviously, it makes it difficult for us to price in emerging markets, and the process of converting that revenue back into dollars has also been affected.”

iPhone 14 Pro

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While Apple reported an 8% rise in its fiscal fourth-quarter revenue to $90.15 billion, CEO Tim Cook argued that were it not for a stronger dollar, Apple’s revenue would have grown two-fold. digits in the quarter. “The negative impact of the exchange rate volatility in the fourth fiscal quarter was more than 600 basis points. Without the currency shock, we could have achieved double-digit growth,” Cook said.

Maestri says that exchange rates are a very important factor in Apple’s performance. This is from both a revenue and gross margin perspective. Apple hedges its currency exposure “in as many places as possible in the world,” he said, but that hedge is starting to dwindle as the company needs to keep buying new contracts. He adds that Apple also takes currency conditions into account when launching new products. This is contributing to the recent price hike.

Apple still bears some costs

While recent currency fluctuations have prompted consumers in some countries to pay higher prices for iPhones, there are also instances where Apple is bearing some of the cost. In 2019, when the US dollar also appreciated against other currencies, Apple adjusted prices in some foreign markets, restoring them to levels comparable to local currencies a year earlier. However, Apple did so due to lower sales due to price hikes. In Turkey, for example, where the local lira fell 33% against the dollar in 2019, Apple’s sales fell $700 million. “We have decided to modify iPhone prices to be more in line with local prices from a year ago to help drive sales in those regions,” Cook said in an interview at the time.

iPhone 14 Pro

But Apple said that in 2022 there would be no decline in demand in these markets. Even in local currencies, India, Indonesia, Mexico, Vietnam and other countries saw double-digit revenue growth, Maestri noted.

“It’s important for us to look at how these markets are doing in local currencies because that really gives us insight into how our customers are reacting to our products, their engagement with our ecosystem and in general,” he said of earnings. to call. We have a better understanding of the strength of our brand. We have to say that we are very pleased with the progress we have made in many markets around the world in this regard.”

Other brands are affected by currency fluctuation

Apple isn’t the only company that recognizes that currency fluctuations have an impact on its pricing and business decisions. McDonald’s reported that currency fluctuations reduced its revenue by 7 percentage points, resulting in a 5% year-over-year decline in revenue. Without exchange rate effects, their revenues would have grown by 2%. McDonald’s CFO Ian Borden said on an earnings call last week that 60% of the company’s revenue came from outside the US, which apparently fell when converted to US dollars.

The impact of exchange rate fluctuations on P&G is increasing. The consumer goods company reports that its net sales fell 6% due to unfavorable currency effects. The company had to revise its forecast for adverse currency effects this year to $1.3 billion. Chief Financial Officer Andre Schulten said on the company’s earnings call last week: “Exchange rates continue to work against us.”

Coca-Cola Chief Executive James Quincey said a strong dollar has been a tailwind this year. About 80% of the company’s profits come from outside the United States. Quincy expects a bigger negative impact next year. Like Apple, Coca-Cola hopes to offset some of the 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. He said: “We see that consumers are beginning to respond in the way they normally do in a recession, deferring non-essential purchases and perhaps turning to more private label or discount channels. The impact of the reduction in the purchasing power of the market. It is gradually emerging.”

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