Update 1: Apple has reduced the price of iPhone 5C and iPhone 5S by $100. The 16 GB version of iPhone 5C is available at $549 now. This clearly indicates that 8GB version of iPhone 5C will be much more cheaper, atleast down by another $50 or so.
As we reported earlier, Apple Inc. (NASDAQ:AAPL) is now set to introduce the lower version of the iPhone 5C with 8 GB storage option at $549 $500 on May 18, 2014. According to a few leaked images and screen shots, Apple is all set to intensify the competition in Smartphone market by making another round of price cut in iPhone 5C. However, this time the company has also downgraded the storage capacity from 16GB to 8GB. Currently, Apple’s 16GB iPhone 5C is available on Apple Store for $649 and we have learnt that Apple has planned to cut down $85 to $100 for the 8GB variant of iPhone 5C.
Apple is trying to position the new 8GB iPhone 5C as the attraction point in the midrange smartphone market, largely dominated by Samsung with Galaxy 4 and Note 2. It’s also being anticipated that Apple could reintroduce the discontinued variants of iPad – iPad 4 and iPad 3 – with a steep price cut to eat into Nexus 10 and Samsung Galaxy Tab markets.
Apple iPhone 5C 8GB: A Game Changer?
The move is being seen as an effort to break the jinx in emerging markets, especially China and India. The two countries together, hold maximum number of mobile phone users with a big window of opportunity in the Smartphone market in near future. More than 2.2 billion mobile phone subscribers, together in China and India, make the APAC region the largest mobile phone market for any vendor in the world. Samsung is already enjoying the biggest pie of the market, while other local players in China and India – the likes of Micromax, Karbonn, Huawei, Lenovo, ZTE are already marking their presence by capturing a sizable market share in their respective country.
Apple maintains 21.6% of total smartphone market in China. In India the market share of iPhone remains in single digits, despite of a 400% growth after the aggressive price cut in iPhone 4 and iPhone 4S. This puts Apple on the losing front as the iPhone maker is failing to grab a sizable share of newly developing smartphone market quarter over quarter. Apple’s disappointing growth rate continues in the global market as well, as the company is failing to accelerate its growth due to non-existence in the mid-range Smartphone market.
While the U.S. market has saturated, Apple is left with no choice but to accept the law-of-the-land. Both China and India are known as price sensitive markets and Apple’s future growth is largely reliant on the Smartphone market in these two countries. In 2013, India had recorded a whopping 172% YOY growth in Smartphone market, while in China it is on its way to touch 1 billion smartphone users. In both the countries more than 40% of the smartphone market is controlled by mid-price-range ($150 – $449) smartphones, which is an untapped market for Apple.
Smartphone Market: Price Way Has Begun
The whole world is eyeing APAC as the biggest opportunity in the Smartphone market for the next few years. In China 540 million mobile phone users (1.24 billion mobile phone users, 700 million Smartphone users) are yet to adopt a Smartphone, while in India the opportunity window for Smartphone vendors in India is even bigger as 820 million mobile phone users (900 million mobile phone users, 80 million Smartphone users) are yet to upgrade to a Smartphone.
Considering such a humongous growth opportunity in the Smartphone market, homegrown players are betting big time on the market. Besides, the new entrants like Obi – a mid range Smartphone brand, to be floated by Apple’s former CEO John Sculley – will fuel the price war in the region in future.
The homegrown Smartphone vendors – the likes of Micromax, Karbonn, Huawei, Gionee, ZTE, Lenovo, Coolpad, have triggered the price war and have been keeping global players Samsung, Nokia, LG, Sony on their toes for long.
Apple Wants To Double The iPhone Market Share In 2014
In 2013, Apple sold 153.2 million units of the iPhone and 73.6 million units of the iPad worldwide. According to a few market predictions Apple could sell 250 million units of the iPhone in 2014. In China alone, Apple is expected to sell nearly 20 million units of iPhone, while Foxconn is expecting to manufacture 90 million units of iPhone 6 during this year.
In India, Apple is actively working on the new pricing strategy for obsolete the iPhone 4 and the iPhone 4S. This could help Apple place its bet into the entry-level Smartphone market in price sensitive regions like India and China. Reports claim that Apple could make another price-cut to bring down the price of iPhone 4 and iPhone 4S to $250 and $350, respectively.
As 41% of worldwide shoppers prioritise price while switching brands, the new price strategy could be helpful for a brand being aspired the most at global level. Apple has emerged as the most desirable brand in developing countries including China, India and Brazil. 42% buyers in China voted for Apple as their next mobile brand, while in India 29% aspire for Apple. Overall, Apple remains at the top as 32% buyers across all 5 developing countries voted for the iPhone.
In a nutshell, Apple is changing and changing in a big way. Since Tim Cook has started steering the company, a number of strategy shifts have been introduced. If Apple can successfully tap into all the three market segments for Smartphones – iPhone 4 for entry level, iPhone 5C mid range and iPhone 6 for premium Smartphone users – it will definitely give the other Smartphone vendors a run for their money.
