This might be a little strange to those who saw fanboys riot in Bejing because Apple refused to sell those who queued overnight the latest iPhone 4s. But it seems that Jobs’ Mob really has a problem selling its religion to the real makers and shakers behind the bamboo curtain. And it’s true in India too
If Apple is going to continue to grow, and its share price insists it must, it has to do extremely well in the region which has 60 percent of the world’s population.
So far Apple has been unable to get any significant result in the country, or in other developing markets such as India. This is because of Apple’s inflexibility which has already banned it from Russia.
The problem is price. Apple is over priced and it will not be moved on reducing it. As Reuters has pointed out at $830, even the older iPhone 4 costs twice the monthly salary of a trainee foreign exchange dealer in Jakarta. To give it some perspective, in London such a job would make about £20,000 so the iPhone 4 costs the equivalent of £3,333.
Apple’s marketing can create the demand, hence the riots, but it cannot sell something which is actually beyond the salary of its Indian or Chinese fanboys.
Apple appears to be hoping that Asian incomes will catch up, although if they do, the cost of making the gizmo will skyrocket.
Many of the buyers of this gear said that they would consider buying an iPhone but they are just too expensive.
It is the mantra which Jobs’ Mob found to its cost when it tried marketing the gear to cynical Russians. Memorably a Russian journalist asked a senior Apple spokesman why on earth he would spend three month’s of his salary on a phone. In Russian the only people who buy smartphones are the Mudra, and that is because you can use cash.
In India smartphones of choice are Apple’s hated rival Samsung, the cheap and cheerful Nokia and RIM’s BlackBerry.
But it does not actually have to be that way. Apple could develop a cheaper version of iPhone for the big Asian markets. The phone does not cost a lot to make and even if you stripped it of some of its functionality to keep the margins, Jobs Mob still could do well.
But in China it also has to deal with the fact that technology will not be ready until 2013 and in India 3G is considered a pretty new thing.
Apple also refuses to budge on the idea that these markets happen to like prepaid phones rather than contracts which screw them to the wall for the rest of this incarnation. While phone companies like the idea of the two year contracts which propped up smartphone subsidising which shoved Apple’s foot in the door in the US.
Anshul Gupta, principal research analyst at consultancy Gartner told Reuters that Chinese and Indian telcos will not subsidise like they do in the West.
What it requires is for Apple to come up with new business models and it has shown less ability to adapt than its old rival Microsoft.
Of course, you could say that Apple has made stonking profits its business model must be working. But that is like saying that the New Zealand Moa did really well. It might have survived in its niche but it could not work elsewhere and eventually predators from outside wiped it out.
Apple’s lack of flexibly, which arguably made it great, are also going to prove to be its undoing in the long term. Most US people do not believe in evolution, but it will be these forces which will eventually result Apple getting a bad case of Malthus