iPhone price cuts: more will come, the analyst suggests

We have seen significant price cuts for iPhone in both China and Japan, and at least one analyst believes that more will follow.

A November report that Apple was planning to lower the price of the iPhone XR in Japan was quickly confirmed, with a rebate of around $ 100 later in the month …

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A report that Apple would introduce price reductions for the iPhone in a number of models in China was also confirmed this month. The price for iPhone 8, iPhone 8 Plus and XR was around 20%.

The price cuts follow Apple's announcement that earnings for the holiday quarter will be between $ 5 billion and $ 9 billion when the company originally forecasted. The resulting shock has led to AAPL stocks continuing to fall and analysts lowering their share price.

Wedbush today suggests there will be further price cuts for iPhone.

[China is critical for Apple going forward and that’s] Therefore, we expect more significant price reductions for XR in the coming months. While some investors have to worry about price cuts and what it means to grow in the coming quarters and lose the perception of being a luxury smartphone, they need to step back, it's all about the installed base for Apple.

In our opinion, Apple faces a "code-red" situation in China. The right pricing strategy for XR and future versions will be the key to ring-fence the installed core base of the region. With better competition from all directions with Huawei and Xiaomi front and back, Apple must ensure that it loses no current iPhone customers in the next few quarters, and therefore addresses the clear price reductions along the way.

More controversial is that the company may argue more controversially that, given the need for services to shoulder more of the pent-up demand, Apple may need to accelerate the roll-out of its long awaited streaming video service, and a larger takeover may be the only realistic route do this.

With services as the linchpin of Apple history, Cupertino must seriously consider whether significant new acquisitions will be made over the next few years to advance its services. We believe Apple's stand-alone video content service is in sight for next year. However, the company is behind the eight-ball in this substantive arms race with Netflix, Amazon, Disney, Hulu, and AT & T / Time Warner all following this next consumer barrier.

While acquisitions were not part of Apple's core DNA, cupertino's watch has hit midnight in our opinion, and content organic buildup is a slow and arduous path that makes it clear that Apple plans to launch larger, more strategic M & A programs next year. Content content must "double" and drive the flywheel of services.

Wedbush suggests A24, Lionsgate and Sony Pictures as the "most likely" acquisition for Apple, with Viacom / CBS and MGM Studios being "medium probability".

It is often suggested that Apple could acquire Netflix or Disney, while other commentators just as quickly reject the idea. Wedbush describes both as "low probability".

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