Affordable iPhone Apple’s Key to Chinese Markets

by Matt Klassen on January 15, 2013

In the battle of emerging communist markets Apple CEO Tim Cook has decided to not ruffle as many feathers as his Google counterpart did last week, choosing instead to visit a regime that everyone is slightly more comfortable with: China. Foregoing the guise of a ‘private humanitarian’ mission, Cook’s journey behind the Great Wall, nevertheless, has the same motivation as Google’s Eric Schmidt’s recent visit to North Korea, stimulating his company’s brand along the frontier of the smartphone market. 

The difference with Cook’s visit to China, however, is the questions it raises about Apple’s product plans for the largest country in the world. While Apple’s presence in the country was certainly buoyed in Q4 of 2012 by the release of the iPhone 5, if Apple is going to reach China’s 1.3 billion inhabitants its going to have to do something I would never have thought it was willing to do…change the iPhone.

To that end, the only way Apple will develop a strong foothold across the entire country is if it adopts Nokia’s global quantity over quality strategy and offer a pared down affordable version of the iPhone.

Historically Apple has shown an aversion towards changing its form factor to accommodate individual markets; its stubborn refusal one of the key reasons Android is now the world’s top mobile operating system. But as with everything else in Apple’s world, there’s little doubt that the company’s entrenchment regarding the iPhone form factor has been about money, it’s simply not cost effective to change the iPhone for different regions…unless of course that region is China.

As Yankee Group Research Director Carl Howe quipped in a recent interview with MacNewsWorld, “If you offer Tim Cook enough volume, he’ll build a lot of things for you.” In fact, in a world where all the premium smartphones markets have long been awash in iPhones that only real place for companies like Apple to expand is into the lower end markets, further evidenced by Google’s own excursion into North Korea.

Countries with large rural populations are the final frontier of the mobile market, but the only way to reach them is with affordable technology. As Nokia has found, global cellphone dominance isn’t that hard to achieve, as all one really needs to do is sell a phone that agrarian and nomadic people groups can use and afford; although as we’ve seen, making a profit through this strategy is slightly more difficult.

So will Apple release a pared down cheaper version of the iPhone? Its a question we’ve asked before, and at first blush it doesn’t seem likely, simply for the fact that Apple has made a name for itself by releasing the best, most cutting edge product it can, so reversing that strategy by choosing affordability instead of advancement just doesn’t seem to be part of the company’s mindset…yet. Of course I never thought Apple would undercut its tablet dominance by releasing the 7-inch iPad Mini either, so perhaps under the gaze of Tim Cook Apple will once again tarnish the legacy of dominance established by the late Steve Jobs.

In the end, there’s little doubt in my mind that Apple is realizing it can no longer maintain its elitist perspective on its products, so while the company has never been motivated by affordability in the past it will soon have to change its tune, or find itself running out of new customers.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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