APPLE shares slumped yesterday after investors raised concerns that a new cut-price iPhone model is not cheap enough to boost the company’s market share in developing economies.
Analysts at Piper Jaffray, UBS and Credit Suisse all reduced their outlook for the company’s stock following Tuesday’s long-awaited announcement of the iPhone 5C, a cheaper version of the popular smartphone which had been expected to boost Apple’s sales in emerging markets.
But brokers raised concerns that the 5C is still too pricey. The model will sell for 4,488 yuan (£463) in the crucial Chinese market, putting it out of reach of most people in a country where the average monthly income is substantially lower.
Shares in the technology company closed down 5.4 per cent at $467.71 on the Nasdaq, representing an unprecedented reaction to the announcement of a major new Apple product.
“Rather than offer attractive pricing for consumers, and move the iPhone 5C into a new and growing price segment, Apple retained a premium pricing strategy in targeting the $400-800 smartphone segment,” said Credit Suisse analyst Kulbinder Garcha.
“This decision, at the margin, is good for profitability but not growth.”
Cheaper handsets running the open source Android operating system and local variants have come to dominate China and other Asian markets, leaving investors concerned that Apple is not doing enough to move out of its natural premium price bracket.
Apple also announced the iPhone 5S, which will succeed the existing iPhone 5 model and includes a fingerprint recognition feature.
Both phones will go on sale in the UK on 20 September – next Friday.