The Potential Impact Of The iPhone 5C
Apple has been heavily rumored to introduce a new cheaper version of it's premium handset. So far leaks have pointed to it being called iPhone 5C.
Apple started off as a premium product maker.It's Macintosh lineup placed it above the cheap the PC world. The company managed to earn massively because of this strategy and it cemented the brand's image as the maker of beautiful ,high end and premium products. Apple changed this strategy a bit and introduced the iPod but it only made Apple's image as a premium brand even stronger even though the iPod was bought by hundreds of millions of people. The company went on and introduced more mass market products like the iPhone and iPad. The iPhone made all of us associate Apple with the cool and cutting edge and Apple used that momentum to create a new category of devices : tablets. Now as Apple seeks entry into the cheaper market segment what effect will the new round of *budget* devices have on the Apple brand ?
1- Will a wave of new affordable iPhones dilute Apple's perception as crown jewel of the mobile world ? Right now ,people save up for iPhones because they are that desirable. If the phone becomes affordable ,do you believe the legions of premium loving fans who associate with the elitism that Apple represents will be disaffected ? Is that even a bad thing ? Or should Apple always remain the brand only accessible by the affluent and Android and it's various cheap imitations be left for the masses to feed on while Apple continues to ride the wave of it's premium image?
2- Will a new cheaper phone hurt the company in the long run ? Unless Apple can make this phone work like the higher end iPhones it might dissatisfy a lot of customers and tarnish the company's otherwise impeccable image? Your thoughts ?
Apple already holds 39% of the US smartphone market share. I believe the introduction of the 5C and it's subsequent iterations will push the market share to 55% within two years. A lot of people are forced to buy sub-standard Android handsets and will benefit from Apple's top notch hardware quality.
In other emerging markets like India and Latin America ,the iPhone 5C would definitely increase Apple's market share by at least a factor of 2.
The most important market is China and Apple is taking a pounding there. The affluent Chinese still buy Apple but the vast majority of the country cannot afford the iPhone. As of now ,Apple has just 4.8% of Chinese market share ,Apple will of course be aware of the pricing required to fix this and I expect Apple's china share to cross 25% in the next two years.
In my opinion the 5C will put immense pressure on Nokia. Expect Nokia to focus more on reducing prices as customers prefer Apple's 5C to Nokia's mid-range phones.Nokia is no longer as entrenched in emerging markets as it once was and it no longer has the admiration and love of customers it once commanded.
The impact on Samsung is hard to guess. Samsung's massive presence in emerging Asian markets like India ,Indonesia ,Pakistan and several other high volume and high growth (with respect to the telecom sector) will make it mostly immune to any threat posed by the 5C. It would seem that Apple will squeeze Nokia and HTC out of this sector and also possibly threaten Blackberry's still entrenched position in many developing markets. Apple can leverage iMessage and neutralize any advantage that BBM has (Services like BBM are still immensely popular in the developing world).
Overall I expect the 5C to push Apple to new heights and allow it to touch more hearts and minds and win even more fanboys. Personally ,I believe Apple shouldn't always be the extreme premium and expensive brand and should make more of the masses feel it's magic. The company will surely position itself to dominate even more with the 5C and the elitist fanboy crowd should accept that.