With the market in the United States pretty much saturated, Apple is looking to China with fresh eyes.
Apple CEO Tim Cook caught many people's attention with a statement made during an interview with state run newspaper Xinhua News while on a recent visit to China:
China is currently our second largest market. I believe it will become our first. I believe strongly that it will," he said.
Prediction? Aspiration? Either way, Cook is betting on China for the future of Apple. He has made three visits in as many years to the country.
A New Model?
Cook's visit was preceded by reports of a cheaper iPhone in the works in the Wall Street Journal, which quoted sources close to the issue that such a device could possibly be out before the end of 2013.
While some think that such a move would cheapen (literally and figuratively) the Apple brand, others see it as an inevitable and necessary move to tap into the enormous untapped market in China. With phones from Samsung and Lenovo as well as smaller local brands all offering cheaper alternatives, a cheaper iPhone may need to be the way forward.
The iPhone 5 is currently listed for the equivalent of US$ 850 on the Apple China site, which is more than 25% of the average urban residents’ income of US$ 3920 (and this is after a pay boost last year). And while reports of riots and scalping follow many of Apple’s launches in the country, if you don’t have the money to pay for the phone, you don’t get the phone. Or do you?
Along with Cook’s visit to China, Apple kicked the new year off with the announcement of a new payment plan, allowing would-be iPhone and MacBook owners to buy online with multiple payments over an up to two year period. To push the initiative, customers who sign on to one year or shorter plans before January 23 will receive interest free payment plans. The plan requires the customer to hold a credit card with the China Merchants Bank Company. As of yet, there is little news on how the scheme is going.
With today's announcement of a Chinese New Year sale to be held only in Asia, there can be no doubt that Apple has come a-courting and it is bringing a big box of chocolates.
Ending 2012 with a Thud
While we don't know when Cook's visit was planned, events at the end of 2012 most likely added to the urgency of the visit. A month prior to the visit, the IDC released a report that dropped Apple’s place in the smartphone market down to 6th from fourth in the previous quarter. A 25% drop in stock shares following the US launch of the iPhone 5 did little to add to the end of the year cheer, with fluctuations in the stock price continuing.