Apple has just announced the iPhone 5C, a plastic-cased, cheaper version of its flagship smartphone. This will help Apple target customers in emerging economies, something analysts say the company needs to do in order to stay ahead in an increasingly saturated smartphone market. Apple is more popular in North America and Europe but lags in developing regions like China, India, South America, the Middle East and Africa, according to recent data. How a cheaper iPhone will change that picture depends on a number of factors, but here are a few countries where it is certain to help.
China is the world’s largest smartphone market and expected to keep that spot over the next four years, according to projections by IDC (paywall). The research firm estimates that smartphone shipments to China will reach 458 million units in 2017, up from 301 million this year. But Apple commands only a 5% share of the market, having lost the rest to handset manufacturers like Lenovo, ZTE, Xiaomi and Samsung, who sell less expensive phones. The old iPhone 5 starts at 5,288 renminbi, or $864 on Apple’s Chinese website; a phone by Xiaomi goes for 799 renminbi, according to Bloomberg.
After reports that Apple may have struck a deal with China Mobile, the country’s largest carrier, some like to say the “C” in iPhone 5C stands for China. Analysts estimate an iPhone 5 sold at half its current price tag, or about $400, plus a deal with China Mobile would help the company sell 32 million more iPhones a year. (Smaller Chinese carriers China Unicom and China Telecom already sell iPhones.) It’s not clear yet whether the 5C will be that cheap; in the US it starts at $99 with a two-year wireless contract, which is only $100 less than the iPhone 5 cost.
India is the world’s third-largest market for smartphones, where smartphone shipments reached 16.3 million in 2012, a 48% increase from 2011, according to IDC. IDC predicts India will replace the US as the world’s second largest smartphone market by 2017.
Here again, Apple is being surpassed by Samsung, Sony and local upstarts like Micromax Informatics and Karbonn Mobiles. The iPhone 5 sells for 45,5000 rupees, or $712, in Apple’s India store, while Micromax’s high-end Canvas HD goes for 14,999 rupees. Less expensive feature phones account for 85% of the total mobile phone market and over half of handsets shipped are under $200, according to IDC.
A cheaper iPhone should also help Apple with late smartphone adopters in the US as well as the slowly growing number of buyers who are moving away from the two-year contracts that subsidize the cost of a phone in order to buy their phones outright. Cell phone carriers like T-Mobile are asking customers to pay for more of the cost of their phones, and customers are also starting to choose more flexible contracts for unsubsidized phones. Moreover, the untapped US smartphone market is mostly among the poorer and the elderly, neither of whom are likely to splurge as much on their first smartphone.