Apple is breaking tradition as the tech-giant plans to release two new iPhone models this year instead of one. The regulated iPhone release schedule is changing due to Apple's desire for growth in specific Asian markets, mainly India and China. China's emerging markets serve as an area of mass potential growth, even though most citizens cannot afford the high price of coveted Apple technology.
According to CNN, the iPhone serves as a status symbol in Chinese social circles. Additionally, Apple's tablet, the iPad, has now joined the "must-have list" for middle and upper middle class urban youths. The social pressure of having an Apple product is strong, especially as the wealthy elites set the trend. For the middle class consumer, having an iPhone is considered a must-have, even if they have to forego other living items.
Thus, Apple now intends to make China, the world's most populous country, its No. 1 market. Apple's release of the rumored low-cost iPhone 5C will help execute Apple's desired growth. Morgan Stanley's Katy Huberty concluded that the "iPhone 5C could increase Apple market share by 13 points in China." Huberty, who was among the first analysts to predict a 2013 release date for the budget iPhone based her results off a survey of 2,000 mobile customers in China. Through her research, she has discovered that consumers consider $486 to be an acceptable price for a budget iPhone, which is 22% higher than iPhone 5C experts are predicting, the expected price for the iPhone 5C is rumored between $300 and $400.
According to Huberty, Apple's market share in China could jump by 19.3% if Apple chooses to release its iPhone 5C on China Mobile for $400 off-contract, which would consequently make Apple the No. 1 smartphone seller in China. Apple's drive into China has been a main goal for the company, in 2011 when Tim Cook still served as Apple's COO, he expressed the Apple's desire to break into "a classic prepaid market." Cook hinted at the necessity and potential for a cheaper iPhone when he revealed that Apple has been doing "clever things" to attack the prepaid market. Apple whose devices serve as class dividers in China, want their products to become accessible "for everyone," not "just for the rich." Cook also discussed money, "price is big factor in the prepaid market," but Apple is not "ceding any market."
Despite Cook's desire to produce a low-cost iPhone model in 2011, Apple has yet to do so. "One of our sources claims that Apple's iPhone prices remain too high for most mainland Chinese customers," iLounge editor-in-chief Jeremy Horwitz wrote in a January report. "The iPhone 5 hardware alone starts at $849 there, versus the iPhone 4 at $500, in a country where the average annual salary is around $3,000 per person. The source has said that mainland Chinese iPhone 5 sales are already tapering off as a result of the pricing, which is higher than in Hong Kong. A budget iPhone model would help sales in populous but underdeveloped countries to grow." Now would be the ideal to add an affordable option to the Apple family.
With consumers clamoring for a piece of the technology that sets them apart, it is no wonder that the piracy of Apple products has exponentially grown. An entry-level or midrange device would take care of two Apple goals at once. By providing consumers with an affordable option within the prepaid market, Apple will successful become No. 1 thus reducing Samsung's smartphone share by 10.3 points or more. Furthermore, Apple will no longer have to seriously monitor the production of fake products that have been increasingly more available for lower class consumers.
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