Why Are iPhones So Pricey In The Philippines?


Successive analyses by Mobile World Live (MWL) into iPhone pricing in 11 key Asia-Pacific markets revealed consumers in the Philippines face the highest prices for Apple’s smartphones in the region, writes MICHAEL CARROLL.

Last month, the research showed pricing for the recently-launched iPhone SE ranged from PHP26,490 to PHP36,490 (US$526.06 to US$724.59), while a similar study in late 2019 showed the cost of Apple’s iPhone 11 at between PHP47,990 and PHP73,990 (US$952.94 to US$1,469.27).

The pricing data was taken from Apple’s local sites and was correct at the time of each piece of research being published, though currency conversions are updated.

These analyses beg an obvious question: why does the Philippines top both tables?

Analysts from three leading research companies pointed to several common factors, including taxation, Apple’s retail model and shipping costs.

Research manager covering ASEAN devices for IDC, Jensen Ooi and research analyst with Counterpoint Research, Abhilash Kumar each cited currency exchange as one factor in play, with the Philippine peso going head-to-head with the US dollar.

Ooi added “freight charges” could also hold influence, an area Kumar expanded on by noting smartphone pricing in any given market is generally affected by “sales tax” and “import duties”: in the Philippines the former is 12 per cent, he said.

Canalys analyst, mobility, Matthew Xie introduced another element in the Philippines question: Apple’s distribution model.

The vendor “distributes through third-party resellers such as Switch, Power Mac Centre and iStudio” rather than its own outlets, which “requires extra margin” for the sales channel, he told MWL.

Kumar also referenced Apple’s model, noting commission on sales “leads to the increased final price”. But, he added, “interestingly, in such countries, the profit margins for Apple is less compared to those where it directly sells through its own stores.”


Now, the reasons why the Philippines ranked as the most expensive market in MWL’s research also goes some way to explaining another key takeaway from the analyses, namely why did Japan rank as the least-pricey market in each study?

Again, retail is a principal element. Xie noted Apple operates ten stores directly in Japan, “saving the margin to channel”. Kumar concurred, adding the vendor’s supply chain in the country is established and it does not lose out in terms of paying commission.

Both also flagged a lower VAT (sales) rate of 10 per cent in Japan.

But Xie said there is more at play in the country, which he noted is Apple’s top market in the region outside of Greater China (a factor borne out by the vendor breaking out numbers for Japan in its financial reporting).

He said this leads to a “scale effect”, whereby the vendor benefits by shipping a higher number of units to Japan than the Philippines: he cited shipments of 5 million iPhones in Japan during calendar Q4 2019 compared with 169,000 in the Philippines.

“Apple Japan enjoys huge cost advantages due to the scale of operation with much lower cost per unit comparing with the Philippines.”

Market appetite and ability to pay for any iPhone model also tips the scales. Xie explained ASPs in Japan stood at $600 during Q4 2019, compared with $185 in the Philippines. This makes Japan “a great match for Apple’s product portfolio” he noted, adding the vendor topped the tables in the country with a 56 per cent market share during the quarter.

“Apple would tend to conduct an aggressive pricing strategy to achieve a higher shipment volume and market share in Japan”, while in the Philippines “Apple’s offering is not affordable for the majority”, resulting in the vendor holding a 3 per cent share in Q4 2019.

Consequently, the vendor is more likely to pursue “profitability rather than volume” in the Philippines, resulting in it tending to “set a higher price” there. 

  • Carroll is a sub-editor at Mobile World Live
  • Editor’s Note: The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

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