Three-quarters of the world now has access to mobile networks, and mobile growth in developing counties is in the double digits. Apple may have some problems in the near future adapting to the smartphone market in developing countries. Google Inc (NASDAQ:GOOG)‘s Android dominates about 70% of the smartphone’s worldwide, and Apple’s price point isn’t helping the situation.
A 16 GB unlocked iPhone 5 goes for $649, a hefty price even in the U.s. In developing countries, where most phones aren’t subsidized, paying for a new iPhone simply isn’t an option. According to smartphone executives at the Mobile World Congress last year, the estimated sweet spot for smartphones in the developing world is about $50. This is a problem for Apple, which has stuck with its high-end phones since inception, but isn’t much of an issue for Qualcomm. Qualcomm’s mobile diversification can be applied to low-end phones just as easily as high-end ones, leaving investors with much more growth potential as mobile continues to expand.
Apple isn’t stupid
I’ve dinged Apple on its focus on high-end approach because it’s important to note. But Apple is one the savviest tech companies around and, despite its recent earnings release, its iPad and iPhone sales prove the company knows a thing or two about mobile. It’s not too late for the company to get in on the developing mobile market. Talks of a cheaper iPhone have been around since at least 2011 when The Wall Street Journal reported an inexpensive iPhone was in the works.
When the iPod’s popularity grew, Apple expanded the line to hit a wide range of price points. It would be smart for the company to do the same with its iPhone. Apple gobbled up about 34% of U.S. smartphone market share last quarter and its dominance in this country can spill over into the developing countries, but it all depends on whether (and when) the company will bring a cheaper iPhone to market.
The better position
Right now, Qualcomm is primed to boom in the mobile environment. Its patent licensing, processors, and MSM chips are found in companies across the board — and across the globe. Qualcomm can expect new revenues from its patents as smartphone companies expand into new markets, and some of its processors have already been widely adopted into Android phones, the dominant mobile OS around the globe.
The article Apple Is Down, but This Smartphone Play Is Alive and Kicking originally appeared on Fool.com and is written by Chris Neiger.
Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Qualcomm.
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