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Apple’s Core iPhone Business Under Stress

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The Apple iPhone 11 costs less than you think, but still means forking out a significant amount of money for an upmarket gadget.

The new iPhone is Apple’s cheapest smartphone since the iPhone 8, but that doesn’t mean the price is any more affordable.

The cheapest model is US$699, rolling back the price to nearer the $649 asked for the least expensive new iPhone 11 between 2010 and 2016.

If you want the newest, biggest and best performing iPhone 11, expect to shell out $1,449.

Those are prices in the US before sale tax, which can come at between zero and 10% of the price and is added at the till, making the dearest iPhone $1,593.

Unfair pricing?

But that’s not the price you’ll pay in the UK.

For British iPhone users, the starting price is £1,049 including sales tax.

Last year, the new edition iPhone was priced at US$999 and £999, so British customers are already paying an extra £50 than their American counterparts even though the US dollar is trading much stronger than the Pound.

Nevertheless, analysts were expecting a bigger price hike thanks to president Donald Trump and his US v China trade war.

But the Americans have done some jiggery-pokery to keep the cost of electronic gadgets down until the new year.

Tariffs on electronics do not change until after Christmas, when the traditional technology buying season ends. The move keeps the price down for the peak period.

Flagging sales

But smartphone sales are flagging in the main markets – China, Europe and the US. Apple saw iPhone sales slump by 12% in the second quarter of 2019. The main factors are saturated markets and uncertain economic conditions worsened by Brexit and the trade wars.

To bolster sales, Apple has trialled some new strategies, such as cheap subscriptions to streaming TV and games through TV+ and Arcade.

But something will have to give with so many streaming TV and movie services serving up the same product at different prices, including Amazon, Netflix and the newly launched Disney.

Gaming is in the same spot with Sony, Nintendo, Microsoft, Google and Apple all competing for the same money.

The losers are the customers, who seek a consolidated service providing all their favourites in one place.

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