Popular Now: What is Pinterest, and Why Should I Care?

Next Previous
Tags: ####

The best thing Tim Cook didn’t announce

Published by on Oct 5th, 2011, 68 Comments

Let’s put aside the fact that Tim Cook didn’t pull a single sheet of clear glass from his pocket, call it the iPhone 5, and redefine what we call a phone yesterday. The 4S is a great phone. And even those spitting with fury at the disappointment will glance with envy at the guy who in a meeting quietly asks Siri to order him coffee for the lunchtime break. More surprising, perhaps, was the absence of a second announcement; a lower-end iPhone to target the emerging markets.

It’s not that there isn’t a business case for doing so. Android is growing at a remarkable rate. Why? Because it’s cheap. In a country like India, with an estimated 600m subscribers, Nokia accounts for 40% of new device sales, with RIM and Android dividing another 36% between them. Apple? 2.6%. It’s much the same story here in SA. Despite the endless hype, iOS devices account for approximately 1% of the mobile market.

And yet, instead of releasing a plastic low-end iPhone to compete with the RIMs of the world, Cook announced instead that the 3Gs, now 2 years old, will be available for free on contract, while the amazing-until-yesterday iPhone 4 will set a subscriber back just $99.

Personally, I think it’s a great move.

Apple is all about the brand. About image. About quality. They have positioned themselves as being the best of the best. Want cheap? Look elsewhere. Want perfect? Get Apple. To release a ‘cheap’ and ‘low-spec’ version of their device would be to dilute this entirely. The equivalent of Aston Martin releasing a competitor to the smartcar. Instead, Apple will work to make the older versions more available, the message being simple; it may be slightly out-of-date now, but it was the best on the market at the time. For the most part, those entering the lower end of the market will still have access to that ‘Apple experience’. And, quite frankly, the iPhone 4 is probably years ahead in features, quality and design than the equivalently-priced Android, Nokia, or RIM device.

It’s more than a nice thought. With the growing market share of Android and the like, capturing the emerging markets is vital to Apple’s growth. The Chinese Apple stores have the highest traffic of any in the world; the Shanghai store alone saw 100 000 visitors in its opening weekend recently. The market size can’t be ignored. And while Apple’s profit margin on these older devices may be very low, the profit generated from in-phone purchases, as well as the brand impact of having more people seeing your products on a daily basis, is huge. The only remaining challenge for Apple is dealing with actually getting these devices into the emerging markets.

Forget the iPhone 4S. The big announcement? The 3GS.

Related Posts

Comments

← Older Comments
  • Anonymous

    Sorry you are mistaken about where the market share is in India — “Nokia accounts for 40% of new device sales, with RIM and Android dividing another 36% between them…” –> that is not right. It’s correct that Nokia is 40% and that Apple is very small %, but RIM and Android are also very small. The rest are Samsung’s featurephones (about 20%) and players like MicroMax (about 10%) etc. I know this b/c that is my day job and there are more figures here http://peek.ly/blog/

  • http://www.appositionconsulting.com Jimbo

    Fine, let’s talk numbers, not airy fairy fanboy opinions:

    Samsung Galaxy S II is also $99 through Amazon Wireless with a Sprint contract (same contract as the iPhone): http://wireless.amazon.com/dp/B005LHN47S  

    So you can get a phone with specs matching the new iPhone 4S for the price of the last generation iPhone 4.  That kinda blows your whole article out of the water doesn’t it?  Oh wait, I forgot,  ”It’s like, just better man!  You have to like, experience it.  It’s like, just the design that’s so perfect.  You cannot compare it dude.”  

  • http://www.appositionconsulting.com Jimbo

    The Samsung Galaxy S II, $99 on a contract :
    http://wireless.amazon.com/dp/B005LHN47S

  • Anonymous

    I did not know that. I always forget about Amazon having better deals than direct from carrier. Direct from Sprint costs twice that much. Thanks for the info.

  • http://www.richoakley.co.za richoakley

    Awesome. I’ve used the SGS2 and I quite like it. I still prefer the experience of my iPhone 4 but a lot of this comes down to personal preference. Hell, my Dad would take a Blackberry over anything with a touch screen. As is the case with a car, a house, or a potential girlfriend, boyfriend, husband or wife, it’s not just about the ‘specs’. Having used both, the UX and tightly integrated services that iOS5 offer make it a better OS. That counts a lot for me. If it’s screen size and RAM that matter to you, you should get the Samsung. That’s a better phone…for you.
    And go take another look at my article. It isn’t an Android vs Apple opinion piece. It’s simply about Apple’s strategy of entering emerging markets, somewhere they are non-existent at the moment, without compromising on their greatest strength; their brand. You’re more than welcome to take something else from it. But, hey, I’ve got a pretty idea of what it was about. I wrote it, after all.

  • Anonymous

    I can’t stand the retina display on the iPhone. It’s too sharp for the screen size and any amount of usage puts strain on my eyes. Several other people I’ve talked with have the same issue. Interesting that I’ve never seen any significant mention of it. It’s always talk of the opposite.

  • http://www.richoakley.co.za richoakley

    There are always so many conflicting reports on these things. The report I referenced was IDC’s latest report which stated that RIM alone accounted for 15% of Smartphone sales in the last quarter. Thanks for the feedback and the link!

  • Artsrc

    South Africa is in the demographic if you buy an android phone.

  • Anonymous

    No worries. Sometimes reports talk about “smartphone market share” not “total phone market share”. In India, smartphones are a small piece of the total market.

  • http://www.bandwidthblog.com Minnaar Pieters

    You realize you throw the terms “fanboy” around, then in the next sentence say plastic is just as good as steel for a premium phone. Goodness…

  • Ari613

    Have you ever used mac products… from the sound of it you are just a hatter… I have never had any problems purchasing apps…!

  • Ari613

    Have you ever used mac products… from the sound of it you are just a hatter… I have never had any problems purchasing apps…!

  • http://chukaman.myopenid.com/ chukaman

    A hatter, lol. What does Alice in Wonderland have to do with Tim Cook etc.? Wow look at that, a question mark at the end of a sentence which asked a question. Fancy that. Oh and full stops. Amazing. It’s like I finished high school or something.

  • Anonymous

    The smartphone revolution is being undercounted.

    Check out this image above. (It’s not a doodle that I made myself.)

    The yellow line is European smartphone market share –> it just crossed over 50% last year.
    The blue line is North America –> crossed 50% this year.

    Both lines are pointed up, up, and away. Look at the last few months. Off the map.
    What’s that line on the bottom?

    It’s under 20%.

    And it’s tilted *down* not up.

    It is the “rest of the world” — and it makes no sense. Nobody is buying smartphones worldwide?
    **Unless you are undercounting smartphones.**

    Look at this gorgeous piece of kit up here — a new phone that a bunch of Peek partners are launching. Huge touch screen, metal body, apps, cool 3D effects in the UI…all very HTC. And super cheap.

  • Anonymous

    I’d like to add you to my professional network on LinkedIn.

    - Amol

    Amol Sarva
    CEO and Founder at Peek
    Greater New York City Area

    Confirm that you know Amol Sarva: https://www.linkedin.com/e/opc6am-gurkd0x4-41/isd/4846256857/HEPVUyUB/?hs=false&tok=1EIhbePF1xVkY1
    –
    You are receiving Invitation to Connect emails. Click to unsubscribe: http://www.linkedin.com/e/opc6am-gurkd0x4-41/Iz0RjNkJTbcHpQYBbhdJUIdxZ-cv2vw5dseRKNKxzJ0/goo/notify-835X0GUHGM%40disqus%2Enet/20061/I1685708251_1/?hs=false&tok=29sMANcD1xVkY1
    (c) 2011 LinkedIn Corporation. 2029 Stierlin Ct, Mountain View, CA 94043, USA.

  • Anonymous

    The Shenzhen Bandit Phone Makers are winning the war on the Indian front. They supply a host of big Indian brands. Local Indian brands used to be 0% of the Indian market, and Nokia used to be 70% (see [this 2007 loveletter in the Wharton business blog](http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4220)). Now, to call them dominant is to ignore the direction of the trend:
    _”Nokia, which according to IDC data continues to dominate market share with a 33 per cent [share of the] pie.”_ ([link](http://business-standard.com/india/news/movingafter-takingmncs/455536/))
    Looks like the Wharton folks called the top.

    That share loss has largely gone to the local incumbents (though some to Samsung — which is a terrific global story on its own). And **these local guys are starting to aim to do more than just sell volume of low cost phones.**
    _”With a view to increasing brand value, introducing differentiation and ultimately creating some intellectual property, India-based mobile handset makers, like Spice Mobility, Karbonn, Micromax and Lava among others are set to increase the average selling price of their product range by an average of 30 per cent.”_
    Grouping those guys together is a little bit of a trick — Micromax is 2x the size of the next one, and the last couple are another 30% smaller.
    Still, speaking uniformly, the folks talking up price increases are saying that they have won the battle in the low end and want to switch their sights to mid-tier and above. But they are also saying the following:
    _”There is a paradigm shift in mobile phone usage. This is now increasingly getting dominated by multimedia and applications driven functions. The idea therefore is to introduce more feature rich phones even in the feature phone segment and more phones in the higher ranges as well.”_
    Phones do more now, most people now have gotten their first phones, and the combination means that people want to trade up to phones that do these things. Hence the focus on higher feature, higher price phones.
    And what are these “features”?

    _”Right now, it is difficult, if not impossible to differentiate between products. We will shift to a computing platform because it is imperative for us that consumers be able to differentiate between products”_
    So the big question for these guys is: what do you consider differentiation via software?
    **Here is the wrong place to look for the answer:**

    Some trends to chew on. For the phone makers building cloud-based app families to distinguish themselves — **Peek’s genius cloud is hard at work.** Check it out at [http://peek.ly](http://peek.ly)

    All the best,
    Amol
    View this email on the web here:
    http://mim.io/db85f1?fe=1&pact=6257582113
    Unsubscribe:
    http://go.madmimi.com/opt_out?fe=1&pact=6257582113&amx=1317299492
    You can also forward to a friend:
    http://go.madmimi.com/forward/6257582113?amx=1317299492

    Peek | 33 W 17th Street | New York, NY | 10011

  • Young Beast

    the iPhone does not use gorilla glass, but a similar chemically treated glass check this link http://www.corninggorillaglass.com/products-with-gorilla/full-products-list; secondly the durability of metal versus plastic is very debatable due to each having it’s own advantages and disadvantages depending on the application and  type used; but take look at this drop test and tell me what you think http://www.youtube.com/watch?v=elKxgsrJFhw

  • http://www.builtneat.com Jason Adriaan

    vertical

    text

← Older Comments
http://www.bandwidthblog.com/wp-content/themes/cnnetwork