Money: Apple's upgrade woes could be Aussie telcos' gain - PressFrom - Australia
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MoneyApple's upgrade woes could be Aussie telcos' gain

00:31  08 january  2019
00:31  08 january  2019 Source:   watoday.com.au

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As Apple ' s share price tumbles, Australian phone providers aren't feeling the fallout. This reliance could weaken, with customers having a wider choice over the handsets they buy or bring to telcos at the same time that Apple competitors were making progress in reaching consumers.

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Apple's upgrade woes could be Aussie telcos' gain© NEW YORK TIMES Apple's Tim Cook sent a letter to shareholders that rattled the markets. Australian telecommunication companies and retailers expect to ride out the China-induced turbulence engulfing Apple arguing the appetite for phone upgrades alive and well in the local market.

While Australian consumers are being more cautious with their choice of phones, suggestions that iPhone upgrades are slowing in developed markets could be a blessing for businesses like Optus and Vodafone.

On January 2 Apple chief executive Tim Cook released an update to investors highlighting revenue for the December quarter would be at least $US5 million lower than previous guidance, due to lower than expected iPhone revenue from China.

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Australian telcos are plowing on with their original strategies despite their share prices following the market down to numbers some might consider to be a right bargain.

While the update was focused on Chinese sales, Cook also observed that "in some developed markets, iPhone upgrades also were not as strong as we thought they would be".

Apple shares plunged nearly 10 per cent on the news before rallying slightly as part of a broader market shift.

Local investors backed local telco stocks in the wake of the volatility with Telstra enjoying its highest closing price of the week at $2.89 on Friday.

The local companies argue the upgrade culture is still strong though concede customers are pickier when it comes to choosing new phones.

"In 2018 Optus saw the strongest growth in consumers purchasing smartphones in the past three years," Optus head of product Shawn Van Graan said.

"We believe this is due to the expansion of our 4G network and the value in plans markedly increasing to include more data and access to content."

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And you can upgrade once you’ve made the equivalent of 12 payments. To see if your device is eligible, please visit Apple ’ s approved partner for the trade-in and recycling of eligible devices. Some stores may have additional requirements.

The three big Australian telcos announced last year that they will begin switching off their 2G networks , with Telstra being the first one to Once this happens, customers on the old network will lose mobile service and will need to either migrate to a new 3G or 4G plan or upgrade their handset.

Vodafone also said it had not seen any material drop in the number of Australians upgrading their phones — but acknowledged that consumers are using more caution when considering new handsets.

"Caution for us looks like customers are looking around, shopping around, rather than lining up for hours on end [for a product launch]," chief commercial officer Ben McIntosh said.

Telstra declined to comment.

A change in power dynamic

Independent telecommunications analyst Paul Budde said news that Chinese customers were buying fewer iPhones was unlikely to have an immediate flow-on to Australia.

However, suggestions that Apple is seeing fewer upgrades in developed markets could increase the bargaining power that companies like Telstra and Optus have with handset manufacturers.

"If the power of Apple and other manufacturers are waning, that could work to the advantage of Telstra, Vodafone and Optus," Budde says.

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In the past, when new products like the most recent iPhone launched, telecommunications companies have had to "just the accept terms that companies such as Apple put on them" in order to package and sell the phones, Mr Budde said.

"They have relied quite a bit on companies like Apple in order to sell their services."

This reliance could weaken, with customers having a wider choice over the handsets they buy or bring to telcos at the same time that Apple competitors were making progress in reaching consumers.

'Too expensive'

Mobile phone repairers and resellers say that a trend is clearly visible among Australians when it comes to smartphones, with customers saying the newer Apple models in particular are "too expensive".

“The older models are still reasonably good for people to use. I have more people coming in demanding older models,” said owner of phone repairer and reseller Aussie Mobile Solution, Anh Vu.

When Mr Vu started his business three years ago, the majority of the phones he saw were iPhone models.

“Now, if about ten people call, only four will have iPhones. About sixty per cent have other models,” he said.

The business had "too many different companies and brands" of phones coming through its doors for repairs", he said, including Samsung, Huawei and Sony models.

His clients increasingly wanted to keep their own phones operating longer rather than updating, he said.

Apple reportedly plans to slow down hiring after weak iPhone sales.
CEO Tim Cook made the announcement after adjusting Apple’s earnings guidance for next quarter

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