Japanese carriers will use subsidies from Apple to discount the cheapest new iPhone, after an underwhelming launch.

Less than a month after releasing the iPhone XR, Apple Inc. AAPL -2.54% is moving to offer subsidies to mobile-network operators in Japan to shore up sales of its least-expensive new smartphone, people familiar with the matter said.

The de facto discount of the handset in Japan, coupled with deep cuts in global production plans for the XR, is a sign of limited enthusiasm among consumers for the model, which has fewer features than Apple’s other two new releases and costs more than still-popular older models like the iPhone 8.

Major wireless carriers in Japan plan to cut iPhone XR prices as early as next week, people with direct knowledge of the plan said, without giving details of the extent of the cut. Japan is one of the most lucrative markets for Apple, which showed a 46.7% share of the Japanese smartphone market in a survey conducted by MMD Labo from July 31 to Aug. 1.

The XR is available in Apple stores in Japan from about $750, but carriers’ pricing is more opaque as phones are bundled with data plans.

It isn’t known whether the Cupertino, Calif., company plans to offer similar programs in other regions. Apple declined to comment.

Apple has used marketing dollars before to discount certain iPhone models and drive sales, viewing it as a lever to manage inventory, according to people familiar with its sales and production tactics. During the iPhone 6s cycle, Apple cut production on one model then offered carrier and retailer discounts to help reduce excess inventory, one of these people said.

When extending discounts, Apple has typically chosen to do so on phones made for specific markets because the cost is less than having to reconfigure the device for resale in another market, this person said.

Source: wsj