While BlackBerry Limited (NASDAQ/BBRY) sends an open letter to investors and the smartphone market begging for its understanding, Apple, Inc. (NASDAQ/AAPL) continues to charge ahead, looking at various ways to expand its sales, especially in the global market.
Even with signs of the recently launched “iPhone 5C” not faring well, the company continues to strategize concerning its direction. (Source: Ellyatt, H., “Apple cuts 5c orders on weak demand: Report,” CNBC, October 16, 2013.) The higher-end metal-encased “iPhone 5S” is performing exceptionally well. (Read “Update: Apple’s Attempts to Enter Emerging Markets a Blunder?”
In the case of Apple, the soft demand for the 5C is not a big deal at this point, but the company will need to find a way to break into the emerging markets. The strategy of producing what is perceived to be a lower-cost version of the 5S (but with a cheaper, plastic look and slower processor) appears to be failing. The issue is that Apple’s rivals have a deep-rooted presence in the emerging markets, with Samsung Electronics Co. Ltd., Nokia Corporation (NYSE/NOK), LG Electronics Inc., HTC Corporation, and others offering smartphones for essentially zero dollars.
In order to excel, Apple needs the emerging markets, especially a deal with China Mobile Limited (NYSE/CHL), which appears to be in the works, as the iPhone can now be used on China Mobile’s 4G network. If a deal is done, Apple will have access to more than 650 million customers who would likely be extremely happy to move over to the iPhone. Of course, the price has to be right. There is speculation the date of an iPhone launch with China Mobile will be November 11. (Source: Arnold, N., “Is This China Mobile’s iPhone Launch Date?,” Wall St. Cheat Sheet, October 15, 2013.)
On the charts, Apple broke back above $500.00 last Tuesday and could edge higher if a deal is announced in China and if the company can fine-tune a viable marketing strategy there. Success could give the company the break it desperately needs in the biggest mobile market in the world. Apple’s past launches in China have generated massive interest and demand.
Chart courtesy of www.StockCharts.com
For Apple, it wants to become a major player in China’s smartphone market. But for success, Apple will have to offer up many monetary compromises that no other market demands.
For an opportunity to sell to the more than 650 million users at China Mobile and the 1 billion-plus users in China, I think Apple could easily offer more monetary incentives to get its iPhone on the big stage.