apple in emerging countries
TRANSCRIPT
Brazil Russia India China Q&A
Apple in Emerging Countries
Russia
ChinaIndia
Brazil
Smartphone Tablet PC
Local Competitions
Brazil Russia India China Q&ABrazil
“On the second country on the list of those 4, for us, would be Brazil. I think
there’s a huge opportunity for us there, and we’ve more than begun to go
deeper in Brazil.”
-Tim Cook on BRIC countries (2012)
Brazil Russia India China Q&ABrazil
Apple in Brazil
47.0%
22.0%
15.0%
7.5%
Smartphones (OS)
AndroidNokiaWindows MobileiOS 45%
25%
9%
6%5%
PC (OS)
Windows 7Windows XPMac OSXWindows VistaLinux
Source: The Motley Fool November 2012
Brazil Russia India China Q&ABrazil
Threats• Government protectionist policies– Import Tariffs– One of the most corrupt governments
Source: www.heritage.org
Brazil Russia India China Q&ABrazil
Threats
• Brazilian Income low coupled with high costs• Brazilian GDP per
capita: $11,900
• Copyright issues• IGB Electronica’s
Iphone• Knockoffs
Brazil Russia India China Q&ABrazil
Strategic Partnerships
• Electronic Retailers – Retailers like Casas Bahia (Best Buy of Brazil)
• Phone companies– Subsidize and lower cost
• Government – Create factories to avoid protectionist policies
Brazil Russia India China Q&ABrazil
Pricing Strategy
• Current strategy for computers okay– Computer prices are relatively same difference
• Need lower cost phone– United States high price phone not effective
• “Apple will launch a new, plastic bodied version of the iPhone at a budget price as early as this year.”
• “The long-awaited budget iPhone will just [sic] £220 ($330)… roughly half the cost of a full-blown version of the iconic smartphone.”
Source: Dailymail.co.uk (March 1, 2013)
Brazil Russia India China Q&ARussia
Δ-23.0%
Note:Sales decline in Russia is also a problem worldwide. Decline to continue in 2013.
Long-Term Competitor’s Landscape
0.0
10.0
20.0
30.0
40.0
50.0
60.0
19.7
0.9
20.5
51.2
3.3
15.6
Tablet Performance
2011 2012
Source: MTS Data 2012 and Infofax 2013
Ritmix RMD-1026Q4 2012
Q4 2011
3.0
3.9
PC Sales Q4 Performance (millions)
YotaPhone
Brazil Russia India China Q&ARussia
Strategic Partnerships
Technology
Russian Tablet Companies
Tablet PC
Network ProviderTop Russian firms (ex. T-Mobile)
Smartphones
Brazil Russia India China Q&ARussia
Smartphone Pricing Strategy
2009 2010 2011 2012 2013
23.6 28.4
34.4 36.8 39.3 Disposable Income (RUR Trillion)
Ideal Range
RUR 10,000 – 14,999
USD 324.75 - 487.10
Realistic Range
RUR 15,000 – 25,000
USD 487.13 - 811.89
2013 iPhone 5 (16GB)
RUR 28,900
USD 938.54
Source: MTS data 2012 and Euromonitor International
> 15,000
10,000 - 14,999
5,000 - 9,999
1,500 - 4,999
13.7%
18.7%
40.7%
26.8%
17.1%
16.6%
51.7%
14.7%
2011-2012 Phone Purchased Range (RUR, %)
2011 2012
Δ+82.3%
Δ+12.7%
Δ-19.9%
Δ-21.3%
Brazil Russia India China Q&ARussia
Tablet and PC Pricing Strategy
• No change for PC price– Decline in the PC market constitutes for other
strategies than price• No change for tablet price– Average Price (2012) = RUR 15,600– Current Price (2013) = RUR 14,900 (16GB) –
22,990 (64GB)
Brazil Russia India China Q&AIndia
Competitors in India
15.9%
15.2%13.2%13.0%
42.7%
PCs
LenovoHPAcerDellOther
37%
27%
36%
Smartphones
NokiaSamsungOther
• Apple• HTC• Sony Ericsson• LG• Blackberry• Micromax
• Karbonn• HCL• Compaq• LG• Zenith• Wipro
Source: Smart Planet 2012 and Live Mint 2012
Brazil Russia India China Q&AIndia
Strategic Partnerships
• Service Carriers (contracts w/ only 30%)
– Crucial to increase partnerships
• Small Stores & Retailers
– Current channel for majority of sales– Need to increase partnerships w/ retailers
Brazil Russia India China Q&AIndia
Strategic Partnerships
• Local Phone Manufacturers• Micromaxx, Spice, Lava, Karbonn etc.
– Utilize Apple’s technology/skills for cheap manufacturing
• Political/Government
– Provide benefits to India for less regulation:
Brazil Russia India China Q&AIndia
Pricing Strategy
• Innovation is Key
– Pricing compared to primary markets
• Economic Trends
– Population & Economy are growing– Future is favorable to higher prices
Brazil Russia India China Q&AIndia
Pricing Strategy
• Geographic Implementation
– Nation as whole has less disposable income– Target wealthier cities first
• Penetration Price
– Need to get prices lower to compete– Trial price slashing would be beneficial
Brazil Russia India China Q&ABrazil
China’s Economy
• GDP of 11.3 trillion in a 1.3 billion populated country.• Government controls financial regulations subsidies,
ownership and credit manipulation.
TRADE FREEDOM
Brazil Russia India China Q&AChina
China’s Economics
34.9%
42.2%
14.6%
5.2%3.1%
Smartphones sold by price
<1,0001,000 - 1,9992,000 - 2,9993,000 - 3,999>4,000
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
8,472.20
9,421.60
10,493.00
11,759.50
13,785.81
15,780.76
17,174.65
19,109.44
21,810.00
24,565.00
China Disposable Income Per Capita
Brazil Russia India China Q&AChina
Apple’s Phone Market Share
22.5%
7.7%
10.7%9.9%
9.5%
8.9%
6.4%
4.7%
3.5% 3.1%
Phone Vendor Market
SamsungAppleLenovoHuaweiCool padZTEGIONEEHTCMotorollaNokia 68.6%
12.8%
12.4%
3.8%
Operating Systems Market
AndroidIOSSymbionWindows
Brazil Russia India China Q&AChina
Apple in the PC and Tablet Industry• 8.38% - Lenovo• 3.63% - Eben• 3.59% - Samsung• 3.27% - Acer• 1.86% - Asustek• 0.98% - Teclast• 0.62% - Ramos• 0.33% - Aigo
Source: Leading tablet PC vendors by unit sales, 2012, Engadget
Brazil Russia India China Q&AChina
Strategic Partnership
• China Unicom – 2009– The 2nd largest mobile service provider – 192.4 million subscribers– Extended the partnership last year
• China Telecom – 2012– The 3rd largest mobile service provider – 120 million subscribers
iPhone sales in China increased five times in 2012
Brazil Russia India China Q&AChina
Strategic Partnership
• China Mobile– 700 million subscribers– 3G Technology TD-SCDMA– 15 million customers use the iPhone– Prepare to launch 4G network later this year
• Qualcomm introduced RF-360 new “global LTE” chipset that operates on 40 bands and support all seven cellular modes (LTE-FDD, LTE-TDD, WCDMA, EV-DO, CDMA, TD-SCDMA and GSM/EDGE)
Brazil Russia India China Q&AChina
Pricing Strategy
• Apple global pricing model• Average smartphone price $308, basic iPhone 4 costs
$650.• The average disposable income in China is 24,565 CNY
($3600)• Cheaper iPhone vs. Chinese disposable income
increased• No handset subsidies from service provider • Sell mid-price model, older version (iPhone 3Gs or
iPhone 4)