The Future: Apple in China
The quiet season is behind us, it was the most prolonged period of quiet from Apple in terms of product releases that I’ve ever known. There’s nothing nefarious to read into; Apple is a company that absolutely loves patterns and consistency and there is no better way to stay consistent than to release products in the same week year after year.
So here we are, the week of Apple’s first announcement event of the season is upon us. I would usually be sat here writing a rumour roundup or something similar. Maybe I’d be having fun shooting down stupid rumours—that’s always a laugh if not sometimes very infuriating.
But life is different for me and spare time is a luxury. Don’t get me wrong I’m still closely watching every rumour, dissecting and calculating the possibilities and the accuracy of individuals. But the rumour game has changed and it’s honestly no where near as bad as it once was. (9to5 Mac and Mac Rumors both have decent roundups.)
Which means I’m going to look at something completely different.
There’s a bolt of frustration that runs through me every time I read a report about iPhone market share, or an analysis predicting how well a product is performing or likely to perform over the coming year. It’s almost always just for North America and invariably it has no reference stating that—quite a typical problem for Americans to assume they’re the only country that counts (World Series anyone?).
Apple has equally been guilty as sin of this in all the time I’ve followed them. A decade ago it was a guarantee that every single product would launch in the US first followed by the UK, Canada and so on. And yes I’m aware of regulatory problems, I’m aware of manufacturing limits, and so on.
But the tables have turned and 2013 marks the first year that we’re seeing a sea change, and if the signals are correct then we’re seeing it in a big way.
The first of those signals is Apple’s foray into what looks to be a much cheaper model of iPhone, much like with the iPod and iPad Apple is beginning to diversify the iPhone range. Traditionally what has occurred is that when a new iPhone comes out then the existing models shift down the line and take up cheaper spots on the lineup. The problem with this solution is the the iPhone 4S would still be lingering around with its archaic Dock connector and teeny tiny display, not what Apple wants.
If all rumours are correct, and they’re pretty damn consistent, Apple will unleash a new cheaper iPhone dubbed the iPhone 5C. It’s unlikely that the C stands for cheap but it could possibly mean China. This new iPhone model looks like it’s been trimmed down in cost enough to compete in the huge prepay markets where Apple is not doing as well as it would like (read: China, India, and Brazil). And of course Apple ends up with a decent 4-inch, retina, A6 powered, iOS 7 ready device in its other big markets, soaking up where Android enjoys much freedom these days.
If that isn’t enough the new iPhone 5C will have a polycarbonate shell available in yellow, blue, red, green, and white. Perfect for those harder to hit markets and great for younger generations who love to customise their phones with cases.
But it’s all about China a gigantic untapped market, a lot of Apple’s lack of traction there will be down to culture, particularly the culture of buying phones without carrier subsidy but also there is not the level of wealth that’s available in the Western world (China’s GDP per capita is $9,162 compared to America’s $49,922).
The key to the market appears to be China Mobile, the largest carrier in China with 700 million subscribers (not a typo) and the largest in the world. Up until now there’s been no deal between Apple and the behemoth carrier, this has been rumoured a number of times to be down to “commercial and technical” issues with a part of that being Apple’s lack of offering for the Chinese market. The iPhone 5C as it appears to be dubbed is precisely the handset for China.
The deal with China Mobile, if announced during the September 10 event, will overshadow any product release that Apple has to offer, even if that iPhone does have a futuristic looking OS and fingerprint scanner. Of course it’ll only overshadow if the media and analysts look outside of their bubbles and realise the significance.
Just to give an idea of the market potential in China the research firm Canalys predicts that the Chinese market will ship 352 million units this year alone, more than double the US and that is likely to increase to 421 million in just two years time.
If all this wasn’t damning enough, Apple is stepping up the ante this year and not just simulcasting the iPhone announcement but holding a separate event in Beijing. The events timing which starts at 10am Beijing time (7pm Pacific, Sept 10; 3am London, Sept 11) makes it impossible for those who emcee the Cupertino event to be in attendance. Will Cook simply ship over some familiar American faces or will we see the first senior Chinese executives on stage giving an Apple presentation in Mandarin?
If you’re still not satisfied with that then the fact that Apple broke out fiscal results for China in recent quarterly results is a sign that the company going to be proud to show off some steep growth in the coming years.
However it shapes up we know for sure that it’s time American analysts stopped looking in their own back yard and starting staring over the pacific towards the future. I’m not suggesting we’ll see Apple shipping products in China before anywhere else but they will continue to cater purely to the market, they will sink significant dollars into the market and the company focus will inevitably shift—the centre of gravity will move.