iPhone Market Share: Although there has been a lot of talk lately about Apple Inc. (NASDAQ:AAPL) diving into emerging markets, it appears the company has run into some roadblocks along the way due to minimum purchase requirements combined with price subsidies.
This is a growing problem for Apple, and one that the Cupertino based company will need to figure out as it moves forward with hopes of growing market share of its most popular device.
According a recent report by Bloomberg, Apple Inc. (NASDAQ:AAPL) is missing out on the ability to reach nearly 3 billion customers because of these issues. Check out that number again: 3 billion. This is a huge number, especially for a company that is looking to expand its reach and fight off the competition, which includes increased pressure from Samsung.
What is the problem? In short, if a carrier wants to offer the Apple Inc. (NASDAQ:AAPL) iPhone, they are faced with strict requirements. While some are able to meet these requirements, others don’t have the ability to do so for one reason or the next.
For example, there is a minimum purchase agreement in place. While this may not sound like a big deal, since the Apple iPhone is such a big seller, this is not always the case. Companies have had issues with this in the past, such as Cricket, as we noted earlier in the year.
What about the price subsidies? Once again, this is an issue for carriers in emerging markets. They just don’t have the ability to meet the strict requirements that Apple has placed on them.
This trouble has gone a long way in fueling rumors of a cheaper Apple Inc. (NASDAQ:AAPL) iPhone. While a cheaper smartphone would be a big change for Cupertino, it would also allow the company to reach more customers around the globe.
Here is an example from the Bloomberg piece:
“For smaller wireless-service providers, teaming up with Apple can be a double-edged sword. U.S. Cellular (USM) signed on last week to offer the phone after agreeing to sell $1.2 billion worth of handsets over three years. The company had long said that the handset costs too much; yet, not having the iPhone was costing it customers. Telefonica Czech Republic dropped the iPhone because it couldn’t afford the subsidy.”
It is safe to say that Apple Inc. (NASDAQ:AAPL) is considering all its options for reaching more of these customers. Remember, many of these people want to buy an iPhone, however, it is not possible in their region.
For more on the possibility of a cheaper Apple iPhone, see the video on the following page: