Apple bets over 65% of iPhone XR inventory on Chinese market

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Weeks after opening pre-orders for its more expensive iPhone models, Apple finally began to take preorders for its latest midrange phone iPhone XR on October 20. To meet potential strong demand from Chinese users, the US smartphone giant has bet over 2 million (or 65%) of its first batch of 3 million iPhone XR handsets inventory on the Chinese market, local media reported citing people familiar with the matter.

Compared with iPhone XS and iPhone XS Max whose price is up to RMB 12,799, lots of analysts predict the iPhone XR will become the bestseller for the future two quarters with its more affordable price tag where users can start at RMB 6499. iPhone XR’s lower price range will bring down iPhone’s average pricing, but it may achieve high shipments by attracting users who want to seek replacements for their iPhone 6, iPhone 6s and iPhone 7, Robert Cihraf, an analyst from Guggenheim told local media. He expects iPhone XR shipment to account for 40% of iPhone shipments by Q4 this year, and 50% by Q1 next year.

Extra attention to the Chinese market in inventory arrangement, especially for the inexpensive iPhone XR, speaks to Apple’s plan to appeal to customers in China. The country is Apple’s most important emerging market but where the company has seen continuous declines.

Apple is smart in setting a mid-priced for iPhone XR, according to Bloomberg writer Tim Culpan. He explained that the RMB 7,000-ish price range would be attractive for Chinese users because it’s obviously a cheaper alternative. But more importantly, the price tag would also grant a decent spec phone so it would “give face” to the users, which is an important part for the argument to purchase an iPhone in China. The company is also catering to the need of Chinese users feature-wise with its long-overdue move into dual SIMs.

However, initial sales of iPhone XR, which recorded approximately 2 million units in the first three days, are weaker than expected. The US smartphone maker is facing increasing competition amid rising local competitors and a stagnating Chinese market.