While looking through the iMore Forums today I happened to come across a thread asking whether or not Apple can afford to to stay high-end only. While I don't necessarily agree with that specific comment about them only catering to high end, the conversation quickly changed to how Apple handles emerging markets.
IDC numbers seem to indicate Android in particular and even WP8 are getting headwinds. Can Apple sustain growth without a "real" budget offering?
Initially, a lot of folks were under the impression the iPhone 5c would be the device to handle those regions but lo and behold, that c in the didn't actually stand for cheap and Android and Windows Phone 8 continue gaining ground in emerging markets at a fairly steady pace.
It's about to heat up even more as well, with the recently announced Moto G, a $179 no contract device running almost stock Android specifically targeted at emerging markets, although the device will make its way to the U.S. as well.
What everyone is missing is emerging markets. Apple products are not affordable to most people in those areas.
There is of course the argument that Apple can't be losing ground in those regions because they never actually tried to gain ground there and the only folks wanting them to enter that market is the Wall Street types with nothing more than dollar signs in their eyes and that's a pretty good argument but there's also the argument that Apple isn't entirely ignoring them, in fact they seem quite pleased with the growth they have seen.
After all, Apple concentrates on delivering the best of hardware and the best of software all in one package and I question whether or not they even want to build a 'cheap' device just to appease the folks who say they should. But those are just my thoughts and some from our forum members.
What do you folks think? Should Apple be building a cost-effective device for emerging markets or should they leave it alone? Feel free to drop by the iMore Forums and let us know your thoughts on it and all.
Reader comments
Should Apple pay even more attention to emerging markets?
The iPhone 5C should have been what the Moto G is. It's very cheap ($180), plus it's running on quad-core Snapdragon 400, with 720p display.
If the iPhone 5C is like the Moto G, more people would be buying it.
Wish Apple isn't ignorant by calling cheap Android phones "junk" because there are some that are very good for it's price, like the Moto G.
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I will say yes.
Apple doesn't sell only phones, it sells apps and music. If they extend over emerging markets they would have a bigger user base on their ecosystem meaning more people buying Apple which is more money.
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YES, they should definitely pay attention to emerging markets but not by manufacturing a new cheaper iPhone but by decreasing the price of their former flagship further. At the very least by $ 100 - 200 more. I believe that the current strategy of Apple is the best tactic although it may not seem like it at this time but in four years or so it will make perfect sense.
I think that in five years or so, a low-medium range device will be able to handle tasks as well as high end devices spec-wise (I know that the devices currently available can already do this, what I'm trying to say is that in the future, the gap will be smaller than ever. The main difference will be in features.)
Ultimately, I believe that if anybody can get the perfect balance between quality and price without compromise, it's Apple.
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Yes atleast in india. It's that costly that a average earning person can't even dream of it after the iphone 5s launch.
Samsung is the market leader here due to the only reason "cost"
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I think if you're living paycheck to paycheck, then basic needs like food is more important than getting an iPhone.
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Whatever works!
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Yes they have to make more cheaper iPhones for country lik India where money value is decreasing day by day.
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For tablets, I agree with the "don't go cheap" crowd. However, on a cell phone, I would really like to see Apple offer an inexpensive option. Unlike most people, I do not live on my cell phone, i just use it for voice calls and emergency texting. The iPad mini is what I do everything else on. So, I just pre-pay for unlimited talk and text, and am forced to purchase a barely functional Android phone. A sub-$200 iPhone with baaic apps and buttery smooth operation would be fantastic for me! I wouldn't play games or load movies on it, just integrate calendars/notes/reminders with iPad and make calls.
Apple is about the best user experience. Like the article said combining software and hardware to bring the best product to market. Macs are some of the best computers around, did the sell the most? No. Is it profitable for Apple, yes. Even running a small business selling a product, it would be great if you sold the most widgets in your market, but if you can make the best product and have enough profit in it, you can be very successful on selling just a few widgets. Apple may not sell the most products, but they are profitable, and they have a better product than most. You don't become one of the richest companies in the world by selling lots of cheap stuff.
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I think it would be a mistake for Apple to get in to a race to the bottom and would destroy their "premium brand" designation. I have yet to see an Android or Windows Phone OEM come up with a profitable way to sell a cheap phone. They're either getting subsidized by Google and Microsoft or a struggling for survival (HTC for example). The only company that might be is Samsung but we really don't know if their massive profits are coming from selling lots of cheap phones. The profits could be coming from higher end phones and semi conductor business.
When someone can show me how Apple could build and sell a nice, cheap phone for a decent profit, maybe then I'll buy in to them jumping in the low end pool.
I think the question assumes a prejudiced point of view that reflects on the comments being posted. What are emerging markets, poor countries? Countries with poor people? Are there not plenty of poor in the US? Europe is in the midst of a serious financial crisis, in what shape are europeans to buy high-end expendable gadgets right now? The question that should be asked is "Should Apple be paying even more attention to the average phone customer?", because that's the customer who considers price before brand, and that's the market Apple does not much cares about, hence the current prevalence of Android worldwide.
Steve Jobs and now Tim Cook have always mentioned that they want to do quality products. But with the high quality come the high prices too. I think apple should stay hi-end company and that's the right way. If you sell you ecosystem with low-end devices you eat the market share of your own device. Think a little - iOS is one of the biggest pros in iPhone. If you sell it with budget device, there will be less people who will buy the expensive one.
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That's what Apple wants you to think, that quality must be expensive. Its a fallacy to justify the current profit margins.
Apple is traditionally a premium brand. I think it is doing what it does now. I don't think it would be a wise move to lower the price of their products to appeal to emerging markets. It would perhaps sour the premium appeal of their brand in other more developed countries. I think that they should just wait for people emerging economies to grow in wealth rather than try to appeal to them now.
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No because emerging markets will begin to focus on Apple as people become wealthier, not the other way around.
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I live in India and to begin with, they could atleast price the products at par with US non contract prices. The iphone 5s 16 gb is priced at approx USD 900 off contract ( carriers don't sell contracted phones in India). This differential pricing leads to cannabalisation of domestic sales, by people buying full priced phones from USA and getting them in the country. Less sales leads to channel partners not offering deals on legal sales, thus making buying an iphone less attractive.
And to answer the main question, Apple should not bring in cheap phones in countries like ours. Exclusivity is good sometimes.
Yeah I understand your pain with the cost of non contract iPhones, I'm currently studying in Poland and over here the non contact iPhones are also expensive.... Close to $1000 (2950pln). But from what I understand this is not so much apples fault. Apple prices their iPhones on par with US pricing at a fixed exchange rate (probably the highest rate found from the year) then in the host country imposes customs duties and taxes which drive the price to the level we see. For example Poland has 23% VAT added to most products. The exchange rate is around 3 to 1 USD here. So a 650 usd iPhone is 1950 PLN, plus VAT and u get 2400pln plus what ever duties are also added. (But As I said earlier apple uses a higher exchange rate prob 3.5 to 1 as to not lose out on currency exchanges)
Needless to say, I bought my 5S's from the states and shipped them here to save money... And to make some cause I sold 2 of them at apple prices here making 1000pln each ;)
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I love apple because it is an excellent product and did not like the fact that they made a cheaper iPhone. Please keep the Apple name quality and not make cheaper products. If Apple wants to be nice continue to offer the Mac community the announcements like you did October 22,2013 " Apple OS X Mavericks Released Today for Free". Now that is sweet!
I think all the talk of this being the iPad mini that should have been to begin with is so true. While he original iPad mini was a nice little device, as well as being a gamble of sorts for Apple, this new iPad mini is a much more true "iPad". I love that it will offer virtually the same experience as the it's bigger-screen brother (albeit with an ever so slightly slower processor).
There are two ways to define what an iPad mini is. Originally it was mini everything, including mini power. This time around it is more must mini in size. It makes choosing the iPad Air a tougher choice knowing that it's $100 or essentially a few inches if screen. I think that is why we got the redesign and new name "iPad Air"; to give is more a reason to want one.
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I think apple is doing ok without entering emerging markets. In the future they probably will have to as they lose market share
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If it comes at the expense of quality then no. Apple should not turn into Nokia just to sell more. If apple dilutes its brand with cheap products it will ultimately ruin its high-end products. Apple had always been about delivering the best experience possible by delivering cutting edge technology.
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I think that if they want to stay away from emerging markets, they probably have a good reason for it, but personally if I were them, I would enter those markets. It's a huge chance for them to get a lot of new customers, and if they do that they will make more money, which will allow them to make even better smartphones! I'm up for that!
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I personally don't think Apple should create a cheaper phones for these emerging markets, if anything they should just continue to produce 3GS or 4's (not 4S) to be sold there. (With maybe additional color variations like the C, just to freshen up the Device a bit) This would eliminate lots of costs for Apple, by reducing R&D costs such as molds or specialty machines to create them, as these costs have already been accounted for from previous years sales. Additionally the issue of quality would no longer be an issue because they are selling devices already to be of known good quality.
Plus the components for a older device to be created will be much cheaper to buy for apple compared to the newer (5S and 5C) components which would aide in the reduction of cost for the phones. Idk.. Just my 2 cents
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It will be a distraction for Apple to focus on trying to serve the emerging market. It should focus on what it does best, producing great products. The Samsungs of this world will produce for the EM. Nothing wrong with that. As a long time investor in Apple, I much prefer it do what it does best. As a long time Apple II, mac and now its various mobile devices, I prefer it should focus on what it does best.
Louis Vuitton was recently quoted that their handbags aren't priced high enough. At first thought (after killing a paycheck on a few of them for my wife), I was like WTF? How greedy can a company be?
But, as I thought about it further, there's a reason why it's popular and makes a statement when someone has one.
In that respect, Apple is right to not underprice or cut their price for the sake of market share. I've played with a dozen Android tablets and smartphones, but no matter the initial wow factor, the overall experience that Apple pays so much attention to is what makes me not even think twice.
If they want a piece of the emerging markets, Apple's previous gen devices - as long as they're not abandoned too quickly - should be enough to be a whet the appetite for the ones who really want the cream of the crop to step forward and grab it.
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I think they should, because sooner or later the only real area where manufacturers will be able to gain new customers will be in those emerging markets. There are billions of people in those emerging markets without a cell phone so that is a huge market that apple is missing out on simply because they seem too arrogant to venture into those. Now they don't have to make a junk device to meet those low prices in those markets, but it is a huge cash cow apple is missing out on and letting others take advantage of.
Just my opinion leave it alone. I think part of the reason a lot of people want Apple products is because it's looked at as kind of a luxury brand. It's about quality with apple and I think cheap and quality don't really go hand in hand.
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While I do think the developing market is important, I think apple has a large enough fan base to continue business for a long time without the developing market
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I don't really understand why Wall Street wants Apple to expand.. I mean emerging markets?? Making low-end cost efficient devices? How much revenue is really going to be made in selling to those low end markets? Sounds to me like greedy folks. For those in the emerging markets are not really missing much. "You cant miss what you never had." Even though Apple's mobile marketshare isn't high, they are turning quite a nice profit. I say, "If you keep doing what you’ve been doing, you’ll keep getting what you’ve been getting". I'm glad Apple isn't all that greedy, trying to dip their toe in every pond they see... just my 2 cents.
Well written and echos the same things posted in the forum thread
I agree totally
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I think Apple should not make cheep products. Us Apple people buy Apple products for there quality. The IPhone C I feel was a dum idea buy Apple.
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Apple doesn't need to build a cheap anything. They can just price the iPhone 5c, iPad Mini, and iPad 2 much lower than they are currently priced. By sacrificing some short term profits they can grow their install base for the long term. Apple can afford to do what ever it wants.
I don't think that a cheap iPhone is the answer. Apple delivers quality and you can't make quality cheap.
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There's not much rationale for Apple to do it. There's only one reason I can think of, and that is to shore up platform so that developers don't ignore iOS or make it their second priority. That's barely a reason. Barely. It really doesn't add anything to their bottom-line. Maybe 10% more profit at most.
Everything else is a risk for destroying their business. If they don't prevent cannibalization, it nukes their high end unit sales and therefore their business. If it degrades their brand, it nukes their high end sales across all products and therefore their business. Just isn't worth it.
"the only folks wanting them to enter that market is the Wall Street types with nothing more than dollar signs in their eyes" These people are stupid. Strike that. These types are likely malicious bear types who want the stock to go down.
If Apple was starting from zero, starting on the low end and moving up isn't that bad of an idea. But that's not Apple, and Apple's modus operandi has been a premium hardware company for a long long time now. They just need to maintain their share on the high end, and move on to the next big thing, where actual profits can be made. (Frankly, I don't what type of business that can actually be as big as Apple's iPhone business, other than utilities.)
Emerging markets do need a 'cheaper' version of the iPhone. A few of my friends have settled with android or windows phones just because of the affordability issue.
Some might argue that if you buy a computer worth more than the iPhone then you can afford the iPhone too but then there's the issue of spending that much money on a phone. People say that of I am going to spend that sum of money why not put some more into it, get an android or windows phone and upgrade my laptop too. Which would would, overall, be a better deal.
That being said, Apple does sell it's products with the promise of exquisite build quality and brilliant software. Bringing that into perspective, a 'cheap' Apple device might not seem marketable and essentially against the company's selling pitch.
But if say that 'cheap' may just be what's needed in emerging markets right now.
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I live in a "developing" country, which would qualify as one of those emerging markets. The thing is, at least in my country where the majority of people live in extreme poverty, if you can afford a computer or phone, you can very much afford an Apple device.
It's not like I wouldn't want my iPhone to be less expensive, but I chose it because it doesn't feel cheap.
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