Apple holding an event in Beijing sparks more rumours
Most observers like us (see here) are fully expecting Apple to announce an entry level iPhone aimed at the Chinese market. The working name for that device is 5C, it seems. Sources have revealed that Apple is, in fact, holding two events. One in the USA [September 10th 2013] and the other in China [September 11th 2013]. An updated 5S could be revealed in the USA and the budget iPhone, a 5C could be revealed in China. But there’s more to just getting the price right for the 5C. Apple needs to look hard at its m-commerce model. It desperately needs direct operator billing.
“Holding an event in Beijing is a clear indication of Apple’s intention to penetrate the Asian market with its new 5C device,” said Markellos Diorinos, head of engagement management with Upstream.
“Given the size of the opportunity that China holds, it’s not hard to understand why,” he added.
Markellos Diorinos quotes Ovum as predicting that the number of mobile connections in China will rise by almost 100 million by 2017, with smartphone penetration set to rise from 46 per cent to 64 per cent during the same period.
Additionally, Android’s share of market growth is predicted to be more than double that of Apple over the course of the next four years.
These factors make getting the cost of the 5C right all the more significant for Apple in order to ensure the device is within reach of the masses.
Given that the average income in China is around $2,100 per annum, pitching the 5C in at the wrong price point could create serious obstacles as Apple tries to establish its presence in China and other emerging markets like India.
Recent research conducted by UpStream (see here) shows a third of emerging market consumers would only pay $100 or less for a smartphone.
Hence, even if Apple drops its premium price tag, only a drastic drop in the cost of the device can guarantee its victory in these regions.
Another challenge for Apple is its inability to adapt its app store model which fails to take into account that the majority of consumers in emerging markets are unbanked.
Apple relies on debit and credit card details rather than direct operator billing which operators like Vodacom are showing works best in emerging markets.
Otherwise content on the iTunes app store will remain beyond the reach for a large number of these consumers.
As Markellos Diorinos says, “In this light, the depth and breadth of Apple’s relationship with operators such as China Telecom or China Unicom will ultimately determine its future success.”
What about China Mobile, Markellos? We thought that that was the operator to crack!
Anyway, lost in all the latest speculation is the fact that Apple is expected to reveal its answer to the Galaxy Gear – the iWatch.
Which country will it pick for that? The USA, we’d say.