Apple in emerging countries

Brazil Russia India China Q&A

Emerging Countries


Apple in Emerging Countries

Russia

ChinaIndia

Brazil

Smartphone Tablet PC

Local Competitions


Brazil

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)


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


Threats• Government protectionist policies– Import Tariffs– One of the most corrupt governments

Source: www.heritage.org


Threats

• Brazilian Income low coupled with high costs• Brazilian GDP per

capita: $11,900

• Copyright issues• IGB Electronica’s

Iphone• Knockoffs


1.999 = $1,025


5.999 = $3,077


Comparisons


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


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)


Russia

Brazil Russia India China Q&ARussia

Competitive Threats

SmartPhones

Tablets

PCs

Privacy Risk


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



Technology

Russian Tablet Companies

Tablet PC

Network ProviderTop Russian firms (ex. T-Mobile)

Smartphones


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%


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)


India

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



• 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



• 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:


Pricing Strategy

• Innovation is Key

– Pricing compared to primary markets

• Economic Trends

– Population & Economy are growing– Future is favorable to higher prices


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


China


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


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


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


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


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)


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)

Brazil Russia India China Q&AQ&A

Questions & Answers

Apple in emerging countries

Business

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