Apple Inc. (AAPL)’s Turnaround Strategy

Analysts are expecting a mid-September launch of the Apple iPhone 5S and 6. Apple Inc. (NASDAQ:AAPL) will launch both a high and lower-end device. The lower-end device will be sold in markets like China and India, and will be Apple Inc. (NASDAQ:AAPL)’s first attempt at capturing the emerging economies.

What to anticipate

Historically speaking, almost every fourth quarter, sales go through the roof by a significant margin from the previous year. While the year-over-year growth rates do decline, there’s no denying that there’s the potential for Apple to beat the average consensus estimate of 10.4% earnings growth for the following fiscal year. (Apple Inc. (NASDAQ:AAPL)’s fourth quarter ends in September, remember?)

Anyhow, the company is poised to grow significantly, and the bigger upside could be in its lower-end iPhone 6 smart phone device. The company plans to heavily market that device in the emerging market economies. Because of this, Apple could be able to tap into the emerging middle class.

Procter & Gamble projects the middle class will grow by 1.4 billion between 2010 and 2020 and 98% of that will come from the emerging markets. If that’s the case, then Apple Inc. (NASDAQ:AAPL)’s unit sales could grow at even higher rates than what analysts are currently projecting.

Global market share heavily favors Android currently

I believe that Google Inc (NASDAQ:GOOG)’s comparative advantage will eventually diminish when Apple Inc. (NASDAQ:AAPL) finally releases its Apple iPhone 6 in emerging markets. This will be the company’s lower-end device. The device will come with a plastic exterior, and is likely to be much cheaper to produce. This device is what will keep Apple Inc. (NASDAQ:AAPL) relevant in emerging markets as the average household income is substantially lower in these markets.

That being the case, Android still has a lot of pent-up growth ahead of it. It is highly probable that the company will be able to grow sales of its applications through its app store even if it were to give up some market share.

The two companies that will be stealing the market share would include both Apple and Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) is aggressively pushing the Nokia Corporation (ADR) (NYSE:NOK) phone line up in the United States, and it is highly likely that Nokia will be able to remain competitive internationally as long as it can effectively maneuver itself.