As rumored last week, Apple is indirectly lowering the price of the iPhone XR in Japan through larger carrier subsidies. On a 24 month contract, new customers to NTT Docomo can save about $100 over the life of their plan with the new reduced price.

The carrier business model in Japan relies on device subsidies to attract customers, similar to how the US smartphone market used to work. Total instalments for iPhone XR 64 GB on a 24 month contract would total 36,000 yen before this announcement. Now, the device cost drops to 24,000 yen (excluding the price of the mandatory contract fees).

Including a typical contract package, iPhone XR 64 GB on NTT Docomo is now available for around 7000 yen ($62) per month. We would expect other carriers in Japan to follow suit and match the lower prices in the coming days.

Apple is believed to have authorized carriers to discount XR models more heavily due to lower-than-expected demand for the XR in the country. Apple iPhone dominates the smartphone market in Japan with about 50% of sales, but it seems demand for Apple’s latest models was lukewarm.

Rather than switching to Android, Japanese customers appear to be buying iPhone 8 and iPhone 8 Plus in large volume, which has impacted sales of the XS and XR in the region.

Do not expect to see price cuts instated worldwide for the iPhone XR based on the changes in the Japanese market. Apple is careful to apply discounting practices selectively in specific markets, where it deems it necessary to boost sales.

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