Apple's Strategy In Response To Ongoing Strengthening Of The US Dollar
Darlene Tverdohleb | | Sep 14, 2015 07:48 AM EDT |
(Photo : Reuters) Apple will increase the price of Phone on several key markets, excluding China.
The U.S. dollar's continued strengthening has affecting the profits of a wide range of multinational companies, including high-tech giants like Apple Inc. Around 64% of the company's revenue is coming from international sales, which means that Apple has a lot of exposure to currency exchange rates.
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With various currencies getting weaker against the U.S. dollar, the company struggles not to change prices in response to foreign currency fluctuations, in the middle of a product cycle.
However, the situation is different for the two products unveiled last week, the iPhone 6s and 6s Plus. As the company is starting fresh on a new product cycle, it will also take the opportunity to raise their prices in certain key markets.
There are already several markets where it is reported by MacRumors that the iPhone 6s and 6s Plus are priced higher than their predecessors. For instance, the price tag of the iPhone 6s Plus in Canada is increased with $60 CAD for each storage configuration, while inn Australia the increase is $80 AUD. The iPhone 6s is coming in at 40 Euros more than the iPhone 6 in the European countries.
The increases are not surprising, taking into consideration how the U.S. dollar has strengthened in these markets over the past year, as Apple needs to preserve its revenue converted to U.S. dollars.
However, not all markets are being affected. For instance, in the U.K. prices remain unchanged, as the U.S. dollar's has not increased in value as significant compared to the GBP.
China is Apple's second-largest market and maybe the most dynamic and important iPhone market for the American high-tech giant. The Chinese currency, the Yuan, has gone through a sharp significant devaluation a month ago, according to the online publication The Monthly Fool.
Investors and market analysts alike have been speculation on whether or not Apple would increase prices in China in order to compensate the Chinese currency exchange rate. However, this could theoretically hurt the demand, and the American company has decided to not change the price of the iPhone in China.
TagsApple's marketing strategy, Apple business strategy, U.S. dollar, US dollar strengthening, iPhone price increase
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