In the fourth quarter of 2012, Apple Inc. (NASDAQ:AAPL) became the largest smartphone vendor in the U.S., with 34% market share. That’s more than just a little impressive, but it’s only a piece of the mobile pie. The developing world is adapting to smartphones quickly, but Apple Inc. (NASDAQ:AAPL)’s current iPhone lineup doesn’t make the cut for people in developing countries. The demand is there for cheaper smartphones, and it’s time for Apple to meet these potential customers where they’re at.
Go where the people are
Apple Inc. (NASDAQ:AAPL) has long prided itself on creating and selling products people didn’t even know they wanted. But so far, Apple’s missed the boat when it comes to giving people in the developing world a smartphone they already want, and Google Inc (NASDAQ:GOOG) has stepped in to fill the need. In 2012, the Android operating system commanded 68% of the global smartphone market share, while Apple Inc. (NASDAQ:AAPL) trailed with only 19%.
This is clearly a bad thing for companies in the “other” category, such as Microsoft Corporation (NASDAQ:MSFT) and Research In Motion Ltd (NASDAQ:BBRY), but it’s not great news for Apple Inc. (NASDAQ:AAPL), either. Its high-end smartphone approach has made the company a lot of money, but its market share in countries like the U.S. can’t continue to grow indefinitely.
A recent NPR article said that the next billion people who will get online for the first time are likely to do so on a mobile device. Companies using Google’s OS have produced a massive number of smartphones around the global, with half a billion Android units shipped in 2012 alone. Apple is behind the game when it comes to the developing world, and it’s likely that the current iPhone prices are holding them back.
It’s all about the Benjamins
One of Apple’s hurdles to gaining global mobile market share in developing countries is that most phones sold in the emerging mobile markets are unsubsidized phones. Apple’s iPhone 5 sells for about $650 with no contract and even the iPhone 4S is $550. It’s estimated that people in developing countries can afford smartphones in the $50 price point, the same price as the iPod Shuffle.
Source: Apple, PCWorld.