Apple IPhone XR Attracts More Android Users Than Prior Models

Apple Inc. Revenue (TTM) | Apple Inc. Quote

Cost Cuts, Brand Value to Boost iPhone Sales

Apple boasts a loyalty rate of 70% per a Merrill Lynch report while its major Android counter parts Samsung (KS:005930) and Huawei had about 54% brand loyalty. Notably, the availability of low-priced Android sets might have caused a brand loyalty problem among users.

To cash in on its brand loyalty, Apple is introducing lower-priced models and slashing prices to encourage user switch and to eliminate any user churn. The company has also adopted new marketing strategies like promotional discounts and trade-ins to bolster iPhone sales in the holiday season.

Moreover, Apple’s move to initiate production of its high-end iPhones in India by partnering with Foxconn, per Economic Times, may further reduce iPhone prices in 2019 for users in India.

The move by Apple comes at a time when iPhone is struggling in the country. Sales of iPhone were flat in India in fourth-quarter 2018. Moreover, Counterpoint Research points out that sale of iPhone may further drop in the country by a quarter to 2- 2.5 million units due to significant competition from Chinese smartphone makers.

Although iPhone is struggling at the moment in India, its initiatives coupled with India’s growing smartphone user base may help the company attract more Android users. Android commands a market share of about 66% in India.

Notably, the number of smartphone users in the country is expected to reach 337 million in 2018 and grow to 490.9 million by 2022, per eMarketer.

Qualcomm Lawsuit Hits in China and Germany

However, Qualcomm’s (NASDAQ:QCOM) ongoing feud with Apple may hinder its growth in China. A court in China banned the import and sale of most iPhone models for infringement of two Qualcomm patents. Notably, Greater China, one of Apple’s major markets, accounted for roughly 18% of Apple’s fourth-quarter 2018 revenues.

Moreover, the iPhone maker suffered another blow as a court in Germany found iPhones violating one of Qualcomm’s "envelope tracking" patents. Per Reuters, Apple said it will withdraw iPhones including iPhone 7 and iPhone 8 after it was prohibited to sell phones that have Qorvo, Inc. (NASDAQ:QRVO) and Intel (NASDAQ:INTC) chips.

Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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