— This is the script of CNBC's financial news report for China's CCTV on September 26, 2022.
Apple's announcement shows that as early as October 5, 2022, prices of apps and in-app purchases (excluding auto-renewable subscriptions) on the App Store will increase. The price increase involves 28 countries and regions around the world from Europe to Asia, including all countries using the euro, as well as Sweden, Japan, South Korea, Chile, Egypt, Malaysia, and so on. This means that consumers in these regions will pay more than before to purchase or subscribe in-App on Apple's App Store.
According to the report published by Apptopia, Apple's app store has actually increased its prices a lot since last July. As of July 2022, the average price of Apple's in-app purchases rose by about 40% year over year, while the price of Google Store in-app purchases rose by only 9% during the same period.
In terms of the reasons behind this price increase, Apple officially did not give a detailed explanation, but many analysts believe that there are two main reasons. One is the strength of the dollar, Apple used price increases to offset the weakness of the local currency against the dollar. Second, Apple's revenue structure is shifting from hardware to software.
So far this year, as the Federal Reserve continues to raise interest rates, the U.S. dollar index has risen by more than 18% cumulatively from the beginning of the year, reaching a nearly 20-year high.
At the same time, since more than half of Apple's revenue comes from markets outside the Americas, this means that the strong dollar is doing more harm than good to Apple's earnings. Almost all of the countries and regions we see this price increase in are areas where local currencies have depreciated significantly, such as the euro and the yen. Recently, the euro has continued to sink against the dollar, falling to a 20-year low and already close to parity. By raising prices, Apple has also shifted the pressure of exchange rate changes to consumers.
Some analysts believe that the price increase will definitely affect app developers and game developers. Consumers may be more cautious when buying apps, and developers will have to become more creative in their pricing.
In the face of the Fed's interest rate hike and the uncertain global economic outlook, virtually the entire technology industry is facing considerable pressure. In an earlier media interview, Apple CEO Tim Cook said that the company is expected to slow down hiring next year, while reducing some team budgets. In addition, for example, Twitter, Microsoft, META, and others, all announced layoffs this year. Tech stocks as a whole have also plummeted.