Let‘s put aside the fact that Tim Cook didn‘t pull a single sheet of clear glass from his pocket, call it the iPhone 5, and redefine what we call a phone yesterday. The 4S is a great phone. And even those spitting with fury at the disappointment will glance with envy at the guy who in a meeting quietly asks Siri to order him coffee for the lunchtime break. More surprising, perhaps, was the absence of a second announcement; a lower-end iPhone to target the emerging markets.
It‘s not that there isn‘t a business case for doing so. Android is growing at a remarkable rate. Why? Because it‘s cheap. In a country like India, with an estimated 600m subscribers, Nokia accounts for 40% of new device sales, with RIM and Android dividing another 36% between them. Apple? 2.6%. It‘s much the same story here in SA. Despite the endless hype, iOS devices account for approximately 1% of the mobile market.
And yet, instead of releasing a plastic low-end iPhone to compete with the RIMs of the world, Cook announced instead that the 3Gs, now 2 years old, will be available for free on contract, while the amazing-until-yesterday iPhone 4 will set a subscriber back just $99.
Personally, I think it‘s a great move.
Apple is all about the brand. About image. About quality. They have positioned themselves as being the best of the best. Want cheap? Look elsewhere. Want perfect? Get Apple. To release a “˜cheap‘ and “˜low-spec‘ version of their device would be to dilute this entirely. The equivalent of Aston Martin releasing a competitor to the smartcar. Instead, Apple will work to make the older versions more available, the message being simple; it may be slightly out-of-date now, but it was the best on the market at the time. For the most part, those entering the lower end of the market will still have access to that “˜Apple experience‘. And, quite frankly, the iPhone 4 is probably years ahead in features, quality and design than the equivalently-priced Android, Nokia, or RIM device.
It‘s more than a nice thought. With the growing market share of Android and the like, capturing the emerging markets is vital to Apple‘s growth. The Chinese Apple stores have the highest traffic of any in the world; the Shanghai store alone saw 100 000 visitors in its opening weekend recently. The market size can‘t be ignored. And while Apple‘s profit margin on these older devices may be very low, the profit generated from in-phone purchases, as well as the brand impact of having more people seeing your products on a daily basis, is huge. The only remaining challenge for Apple is dealing with actually getting these devices into the emerging markets.
Forget the iPhone 4S. The big announcement? The 3GS.
