Is France Signaling a Freeze for iPhone Sales?
If France can be used as a predictor, Apple (NASDAQ:AAPL) may have more trouble selling its devices down the road, as customers are tightening their belts and the pricey iPhones don’t fit well in those lighter budgets.
France Telecom SA (NYSE:FTE) CEO Stephane Richard said in an interview at Bloomberg’s headquarters in New York that the company was facing increased pressure to lower its prices in order to stay afloat in a market that was becoming increasingly frugal.
France Telecom is one of Europe’s biggest wireless carriers, and it was once even a monopoly. But the winds of change blew across the continent and changed the way consumers felt, forcing the carrier’s hand. A cheaper carrier, Iliad SA, entered France’s market and drew in customers, which left France Telecom with no choice to but offer lower prices and even launch its own low-cost brand.
But, the trend for reducing prices and cheaper services might not simply be a matter of competition, and it may extend beyond the carrier market to the device market. Richard said he believes consumers are going to be less likely to fork out for high-end expensive phones.
Richard said the next release of an iPhone could be telling evidence as “selling a phone for $600 is getting more and more difficult.” That figure is around the going price for unsubsidized iPhones, if not even cheaper…
Given, France may stand separate from Apple’s biggest market, the U.S., considering that an unlimited calling and texting plan with 3GB of data costs about $26 a month on France Telecom, while a comparable plan on T-Mobile USA is almost twice as much and still viewed as a bargain.
Richard expects prices at his carrier to increase their decline, as they’ve already dropped 25 percent over the past 3 years. He expects the consumers in France to also seek cheaper devices along with their cheaper services. So, even if U.S. consumers don’t shy away from expensive plans and phones, euro-zone consumers might not be out buying the next iPhone in droves. The U.S. and China may be Apple’s biggest nation-level markets, but a hit in Europe would surely hurt the company.
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