Wednesday, November 4, 2009

How can a Company ...

... that by all accounts kicks a** in its home and developed markets get it so wrong when it comes to the emerging markets people never seem to get tired of talking about - India and China?

I refer to Apple - please click on the title to read an article from Business Week about the poor sales of the iPhone in China. This follows a similar experience in India a little over a year ago. Sounds like Apple learned nothing from the Indian experience where the iPhone was launched at a price involving a premium of about 200% to what the potential market in India by and large knew US customers were paying. The articles I've read indicate something similar is the case in China.

Yes, these didn't involve new contracts but what the Indian cellular services companies didn't say at the time is that a significant percentage of their customers have signed up for "talk plans" and the like that commit them to paying a significant minimum amount monthly even if they don't use their phones at all. Sounds like a contract to me. In my case this amount is actually quite similar to what US contracts commit customers to pay but no discount was offered on the iPhone.

Yes there is a grey market in India for the iPhone but all indications are that isn't large (given the size of the country) either.

I believe the problem is one of corporate attitude - Apple seems to assume a level of ignorance bordering on stupidity among customers in emerging markets. I for one find that offensive. I wonder how many people know that in India we can't even download music from iTunes? I wonder why Apple even found the effort worth it of launching the iPhone here.

Memo to international companies: The main attraction - large volume sales - are clearly possible in the developing world - but for appropriate products at appropriate prices sold through an appropriate network.

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