Why Apple could conquer emerging markets with the iPhone?
By Cédric Pierre-Louis on Saturday 9 January 2010, 01:51 - Apple - Permalink

While everyone is expecting Apple releases this month a new revolutionary device, I can help myself thinking that the iPhone success is far from getting is culminate point. Apple has already sold 40 millions iPhone across the world. Whereas the Steve jobs’ company managed to get “only” 8% of the global Smartphone market, it cumulates 40% of the whole industry profit.
Unfortunately for Apple competitors, this outrageous successful trend does not seem to be temporary; Apple has clearly built a unique and powerful business model – not only based on the iPhone, but the Appstore and iTunes - which will be very difficult to equalize. Apple is going ahead as the leader (in terms of innovation, profitability, customer satisfaction, graphic user interface) of the Smartphone market. Speaking of Market share, RIM is still first, however all the other cellular phone manufacturers are seen as followers nowadays. However, when I claimed that Apple is able to progress so much more, I was thinking about the fact that Steve Jobs' company could get a much bigger market share outside the western market.
In fact, I think that Apple has everything to make a special version of the iPhone, more affordable, addressed to emerging countries. I think that the iPhone is the simpliest and most powerful IT device to access wirelessly to voice and data services (internet). The legendary easy-to-use GUI of the iPhone can work miracles in some emerging markets. Many (maybe all of them) iPhone users can testify that the iPhone can be used by anyone from your grandmother to your 3-year-old daughter or sister. The iPhone is probably the first high tech smartphone which can be used by people who had never use this kind of device before. The iconographic system is so efficient that you can even do many things without being able to read or write.
In some rural areas, this simplicity can encourage people to get familiar to IT. In many cases, the iPhone can be as good as the famous OLPC low-cost laptop, the XO. Although, I think that both of them are great and should be complementary. As surprising as it can sound, some rumors said that Steve Jobs had once proposed to OLPC founder, M. Nicolas Negroponte, to develop and install in the XO an Operating System based on Mac OS X. As a sincere and passionate defender of the open source movement, M. Negroponte refused. But I am curious to know how things would have gone if Mac OS X had been chosen. It is understandable that in terms of neutrality this decision was the best one, but I’m not sure it was the most judicious one. Given the incredible know-how of Apple when it comes to creating friendly and accessible GUI, the result of this association could have been impressive. I do not even speak about how it is rare and surprising that Steve Jobs be ready to install Mac OS X on another computer than a Mac.
This episode also demonstrates something else; Apple is not only a cash flow machine. Analysts and many people used to think that Apple is not interested at all to conceive devices or technologies affordable to everyone. Though that is a wrong prejudice. I am not saying that Apple suddenly become philanthropic; I just meant that while keeping in mind its own interests Apple is able to "think different" comparatively to other classic cash machine firm. Moreover Apple is a company which contributes significantly to many Open source projects. Beginning by webkit (the engine of the Apple internet navigator, Safari), Darwin (the core of Mac OS X) or OPEN CL. So Apple is not so "exclusive and closed", there just became more careful than before... After being hardly despoiled by Microsoft and being so close to bankruptcy some years ago, it something quite understandable.
Another argument can be relevant. Apple is a major actor in the education field. They are number one is the US market and take very seriously this sector. Apple has managed to build a great reputation on US and European campuses. They have a very advanced and all-inclusive strategy which is based on great hardware, great software (iWorks, iLive), great services (iTunes U), dedicated store (education store), as well as a very innovative and customer oriented post-sales services. By the way, iTunes U is one of the most ambitious and interesting Apple initiative in the education domain. This program which provides to students all over the world free courses and lessons from worldwide universities as prestigious as Stanford, Oxford, Yale, the MIT, Harvard, Sophia Antipolis, or Fudan, etc. It is a real success quantitatively and qualitatively speaking.
Now let’s talk about the hardware. The iPhone is a quite expensive device specially when you buy it without a post paid contract. Only 20% of mobile phone customers around the world are used to this type of contract. That means that 80% of customers prefer to use pre-paid credits to use their cell phones. These People are the biggest challenge of Apple and can bring to the Cupertino company new switchers on a long run. To enter this market, Apple first needs to conceive a more affordable multitouch device, technologically (battery life improved) and economically adapted to emerging markets such as the Sub-Saharan market. Africa is the continent where the mobile telephony market knows the most important growth rate. The number of cellphones users has reached the half-billion pick in 2010, whereas they were only 52 millions in 2003. This is an annually increase of 50% against 7,5 % in France and 27 % in Asia, according IFRI figures (Institut français des relations internationales).
In China they accept to change the hardware of their phone (disabling wifi to respect Chinese government criteria). The other option it’s to collaborate with an initiative like OLPC. So many things as to be done in Africa, can you imagine a continent where everything is possible, where Apple can really help people to have another vision of IT. Africa is clearly the new frontier for the IT and ICT industry. However to succeed in Africa, it necessary to really do efforts for understanding the local needs and find a complete new business model.
Unfortunately, there is some elements which claim that Apple do not really care about Africa, and that's really a pitty.
(Stay tuned... article still in progress)