Low Cost, Low Risk

Low risk, low cost. One of the reason why China’s manufacturing industry has been booming for years. How many times have you seen the fake replica shirt or fake iPod circulating the internet? No disrespect but China is the likely source for that product…Why? Because there is demand is the simple answer to that.

One of the biggest un-tapped markets current for Apple’s warrior the iPhone funnily enough is china. The phone only debuted in December of 2012, with the apple iPhone 5 (luckily enough, just in time for the festive period). It would not bad a bad assumption to say that Apple is going to dominate the Chinese market, just like they have every other market this not currently the case. A tiny Chinese company armed with a sub-$100 smartphone is outselling Apple’s iPhone. The smart little device is known as the “coolpad” (Sound a bit like a existing apple product but cant put my finger on what?) There have been rumours of an inexpensive iPhone on the market and after hearing this new, it may be something that may start to be taken seriously. The cool pad retails at less than 20% of the cheapest iphone in the Chinese market, and with its very promising sales highlighting how the lack of low-cost products limits the iPhone-maker in emerging nations. It is rumoured that China Wireless expects sales to rise to a staggering 40 percent this year to 28 million phones. Mind blowing figures. The figures are down to the fact“our company is focused on the low end of the Chinese market,” China Wireless finance chief Jiang Chao told Bloomberg. (This low cost low risk really does work).

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Que “Apple should release an cheap iPhone” Qassée drives a number of interesting points home on his blog. “For Apple to enter and prosper in this segment, it has to determine two things: What sort of premium can it get for a low cost iPhone, and what would the device mean for the rest of the product line?”

I don’t know the mathematics, but I believe that it going to be a very hard challenge to lower the manufacturing cost in order to compete with the very low cost of the Chinese market, after all this is there specialty, but it clear the apple do need to invest in this market.

Per NPD DisplaySearch Research Director Shawn (via Yahoo News): Most mobile phone subscribers around the world can’t afford to spend more than $200 for a smartphone, on top of their service plans. Low-cost smartphone manufacturers create these new products quickly without much investment, which has allowed them to extend their telecom subscriber base to emerging regions.

Whilst China has become particularly aggressive in grabbing a large portion of the low-cost market, I do not think apple should retaliate. I believe there brand is stronger than this. The bottom day the product is a luxury item and is almost a reward for your hard work. I don’t own a ferrari and don’t see them catering to the middle class market anytime soon, but when I do buy my first Ferrari is because I have worked for it. Maybe it is unfair to compare the two together but in this example Ferrari are staying true to there brand, I believe apple should do the same. They are one of a few brands who can charge a premium there products.

Bringing out a low cost mobile phone could damage the brand, in terms of the image and the quality you expect from the products, but I am an “Apple fan” boy I would say that. What do you think, should apple target these emerging markets, or should the continue to do what they do best?

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