Apple will launch a new low-cost iPhone in 2020 to end the decline in sales

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TAIPEI / TOKYO / SEOUL – After losing its share of the smartphone market, Apple plans to launch a cheaper iPhone next spring to conquer emerging market customers and take back the lost ground in China against Huawei Technologies. other competitors, sources said.

The new model would be Apple's first low-cost smartphone since the launch of the iPhone SE in 2016, which started at $ 399. Although the name and price of the new model have not yet been defined, it is considered the latest generation of the SE iPhone.

The decision to revive the model at lower cost comes in a difficult context for the iPhone. Apple announced for the first time a decline in its iPhone shipments since last year and lost this summer the title of second smartphone maker to Huawei. According to IDC data, the US company has also experienced two consecutive quarters of shipping and its market share has dropped. According to IDC forecasts, the global smartphone sector is also facing its third consecutive annual decline in 2019.

The fall of the iPhone is partly attributable to the intensification of the Washington-Beijing trade war that has weighed on the morale of Chinese consumers, the company's third largest market, Cupertino, California.

But Apple's pricing strategy is also attributable to the fact that the iPhone XS Max reached $ 1,099 when it was launched. Tim Cook, chief executive of Apple, acknowledged in January that "price is a factor" behind weak sales in emerging markets.

To boost sales, Apple cut prices on its flagship iPhones and launched recovery programs, which accounted for nearly half of its revenue in the first half. Despite these incentives, Apple is still losing its position as the world's second-largest smartphone maker to Huawei, which is growing rapidly, during this period.

The new iPhone, cheaper, could boost sales of Apple next spring, as the life cycle of the new flagship iPhones, which should be unveiled on September 10, would naturally begin to slow down. The original iPhone SE has sold about 30 million units in 2016 and an additional 10 million between 2017 and 2018, according to Yuanta Investment Consulting.

"The cheaper iPhone SE could serve as a commercial buzzer in the first half of next year, if the new premium iPhones do not perform well in the coming months," said Jeff Pu, Senior Technical Analyst at GF Securities, at the Nikkei Asian Review.

Apple has stepped up mass production of the latest flagship iPhones in the last two weeks of August, and the manufacturing process went smoothly, as there were few new exciting features this year, have two people know about the project.

However, the initial production of this year's new iPhones is about 10% lower than the 80-85 million units of the same period in 2018 – a conservative approach that reflects uncertain global economic prospects, said two other people. But Apple could increase orders at any time if the demand proved stronger, they added.

The size of the new model will be similar to that of the 4.7-inch iPhone 8 introduced in 2017, said three sources. The model will share most of the same components with flagship iPhones this year, and will feature a lower cost LCD screen that will help Apple reach the lower starting price, although the final price of the model is not yet settled. , people said.

Apple plans to unveil next year at least two flagship iPhones with premium organic light emitting diode (OLED) displays. He even plans to release the three models next year with OLED if BOE Technology, the leading display manufacturer in China, passes the certification of the American company for the supply of screens, reported the Nikkei Asian Review.

OLED displays have become popular in recent years because they are flexible and offer better color contrast. The cheaper iPhone next spring may well be the only new handset from Apple that still uses LCDs. Japan Display, which is experiencing financial difficulties, would be its main supplier, while LG Display would also provide an LCD display for this model, said the population.

The cheaper iPhone is designed to help Apple gain traction in emerging markets, where consumers are more price sensitive. It could also offset mid-range smartphone models, such as Samsung Electronics, Huawei and Oppo, as well as challenge Google, which became the number 5 smartphone maker in the US in June thanks to its $ 399 Pixel 3A.

Analysts note that Apple is also lagging behind some competitors in launching a 5G phone.

"Apple is facing a pretty tough year in terms of smartphone competition," said Eddie Han, senior industry analyst at Market Intelligence & Consulting Institute. While most of its competitors have already launched 5G compatible smartphones to lure consumers against a backdrop of industry downturn, Apple has not unveiled 5G phone this year, said L & # 39; analyst.