Is Apple Making the Right Move?

Few years back I wrote a post explaining my understanding on why Apple should focus on the emerging markets. For the most of the part, my discussion was solely focused on the pricing strategy of their product line, iPhones to be more specific. The summary of my post was to lower the iPhone’s price so that Apple can grab the piece of their pie from the emerging markets or the developing nations.

My suggestion came from the data available on market growth and shifting balance of smartphone market share. Back in 2015, I have shared some of the data arguing that as the developing nation adopts the newer smartphone technologies, Apple would have no choice but to move ahead with their plan for emerging markets. Countries like China and India were definitely taking center stage because of their huge consumer base. Almost five years later, the trend continues even today and my prediction is for next decade or so these countries will continue to grow and will become the major focus point for many business entities, not just tech products.

On the other hand you have countries like Bangladesh, Pakistan, Indonesia, Brazil which also has huge consumer base. Even if we pay serious attention to the currently available data, you can’t escape the truth. Let’s take a look at the situation of current smartphone market share by major vendors.

Global Smartphone Market Share by Brands 2019 IDCGlobal Smartphone Market Share by Brands. © 2019 International Data Corporation (IDC).

As you can see from the table above, Samsung still dominates the global market share. What is really striking is that Apple continues to loose it’s global market share when other competitors are gaining by the year. Question arises, what went wrong? The fact is, despite having larger market penetration on developed nations like USA, Canada and other European nations, Apple’s could not reach to the leading position. The only reasonable answer to this mystery is, market is growing at tremendous pace not on developed countries but on developing nations as I argued earlier.

Take a look at the list of Newzoo’s Global Mobile Market Report by country. Sort the data by the penetration rate and compare the data from 2017 and 2018. Take other additional variables in your consideration like size of population, economic growth rate and change in penetration rate of those countries. You will find it’s the developing nations (Bangladesh, Indonesia, India, Pakistan, Nigeria, Philippines etc.) with larger population base has the highest growth rate.

Now, we need to pay even deeper attention to those countries and find out what type of smartphones are these countries adopting. They are definitely not Apple’s iOS rather its Android that’s leading the regional mobile OS market by large margin on those countries. You should not have any confusion on why Android is dominating globally.

According to IDC projection, though the global market saw declining growth rate in 2019, things may look better in the future. By 2023, Android OS based smartphone will grow by 1.9% while Apple’s iOS will grow by 1.1%. However, what’s really frightening is that while calculating five year (2019-2023) Compound Annual Growth Rate (CAGR), Apple will see -1.3% supply growth rate when Android will see 2.1%. This is a huge number while considering the market penetration rate of emerging markets that has larger population base.

So the question that remains is what exactly Apple is doing to face this upcoming challenge? Well, apart from diversifying it’s product line, Apple is also paying serious attention to these markets. Though it can not be verified, recent rumor of launching a cheaper iPhone (iPhone SE 2) could be a great move to get started with. Perhaps decision like these may help Apple to grab some of the market share of these emerging markets while retaining the market domination on developed countries. Then again, let’s not forget that it’s just a rumor. What really happens from Apple’s side in 2020 could be decisive factor and it is definitely something to watch out for.

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