There’s a new disease going around and it’s infecting members of the technology media. I’ll call it the Chicken Little Syndrome. You know about Chicken Little, right? Henny Penny? The sky is falling!
The phrase “The sky is falling!” features prominently in the story, and has passed into the English language as a common idiom indicating a hysterical or mistaken belief that disaster is imminent. Versions of the story go back more than 25 centuries and it continues to be referenced in a variety of media.
Does that sound familiar? Here’s a similar refrain. Apple is doomed!. Today it’s preceded by The Chinese Are Coming! Tomi Ahonen, yet another so-called expert on foretelling the future, says Apple will revert to a niche player as the Chinese advance in smartphone technology. Why? How? Well, mostly because Ahonen says so.
From Ahonen in Forbes:
The iPhone has about 20% market share currently yes, but most of Apple’s strong market is in the most affluent nations, USA, Western Europe, Australia, Japan, Singapore etc.
Aha. Apple isn’t doing well in China, right? That’s despite China being Apple’s second largest market. You see, Apple has a smaller percentage of a much larger pie in China, India, and Africa. So, Apple is doomed because…
This is the case as the global smartphone market shifts to ever-cheaper smartphones that cost one tenth the price of an iPhone, after carrier subsidies are removed.
Of course, this analysis assumes that Apple will not change in a rapidly changing market.
iPhone does very well in markets where smartphones are highly subsidised by carriers, it does very badly in markets where there are no subsidies.
Seems plausible enough, except for the well known fact that Apple is not a static company so shouldn’t be expected to never make any changes in products or marketing strategy.
This is simply more talk about market share being the big differentiator for Apple and competitors. Market share is an important measure of success, but what is more important? Market share (Apple has never been a leader in smartphones) or revenue and profit (where Apple excels, regardless of market)?
Make no mistake that China and India are markets where Apple wants to play (growth in China has been phenomenal in recent years), but not at the low end. Emerging markets grow from the bottom up. That means that as those markets mature, and smartphones begin to saturate the population, Apple could very well be the upgrade device of choice as people become more affluent.
Apple sells well because of product quality and seamless ecosystem. Those facets will be attractive to the growing numbers of affluents users even in emerging and developing countries.
Cheap is not what Apple fears and not what Apple is all about, yet that is exactly where most of the competition in China and India are headed. Is that where their customers are going? Or, as they become more affluent, will they still want cheap plastic?