Apple shares drop after introducing new iPhones

Apple shares drop after unveiling the iPhone 5C and 5S.

Apple shares drop after unveiling the iPhone 5C and 5S.

The new iPhones fail to impress investors as Apple shares drop. Analysts claim this is mainly due to how the iPhone 5C, which is being marketed as a low-cost smartphone, remains too costly for emerging markets like China, as well as how the iPhone 5S lacks enough game-changing features.

Apple shares slid 5.4 percet to close at $467.71 on NASDAQ, the lowest for this month. This comes after at least three brokerages downgraded their rating on the Apple stock. Even so, Apple remains up 18 percent since July, when anticipation about the new phones were being hyped.

The iPhone 5C will cost 4,488 renminbi ($730) in China, which is more than the average monthly income among urban dwellers in China and about double the cost of mid-tier smartphones from domestic companies. The cheapest smartphones in mainland China can be sold for as low as $100 each.

There are also concerns about the chances of iPhone 5C to perform impressively in mainland China, which is Apple’s biggest market after the United States. The company dropped to 7th place among China’s top smartphone companies in the second quarter, losing ground to South Korea-based Samsung and a number of domestic rival like Lenovo and ZTE.

And the iPhone 5C does not seem to fuel excitement among Chinese consumers. A recent survey conducted by Web portal Sina.com shows only 2.6 percent of 35,000 respondents said they would consider buying the plastic iPhone.

Analysts are also concerned about Apple’s failure to secure a parnership deal with China Mobile, the country’s largest mobile carrier with 740 million subscribers, in time for the unveiling of the new iPhones Tuesday. Local carriers China Unicom and China Telecom, with a combined total of 400 million subscribers, will distribute the iPhone 5C.

Meanwhile, Wall Street is also disappointed with the iPhone 5S, reviving fears that the most valuable tech company may have lost its mojo in innovation. While it may have a fingerprint scanner to improve security, analysts say this feature may not be enough for the iPhone 5S to dominate the smartphone market.

But there is still room for Apple to cut prices if push comes to shove. Preliminary estimates suggest that the iPhone 5C carries a total component cost of $165.

Source: Reuters

Image source: REUTERS/ Stephen Lam

Leave a Reply

Back to top