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Apple's strategy for emerging markets and where does iPhone 5c fit into it

Until September 10th, the tech media was abuzz with the rumor of Apple announcing a budget handset to spring up its market share in emerging markets. Well, Apple did deliver a “budget” handset on September 10th alongside the iPhone 5s, just that it wasn’t as cheap as everybody was expecting it to be. At $549 for the 16GB version, it still remains inaccessible to most of the people in emerging countries like India and Brazil.

Talking about India, a recent IDC report showed that Apple held a distant third spot in the market with close to only around 2 percent market share. Windows Phone was faring marginally better with close to 6 percent share (thanks to budget handsets like the NL520), while Android holds the major chunk of the market with over 90 percent share. We don’t have to tell you that the success of Android in the country has been due to the sub $200 market that the local manufacturers have captured so well with their large screen Droid offerings. In such a situation, does the new iPhone 5c hold a chance in this market? Not really.

So why is it that Apple has once again ignored the emerging markets, even when it announced a so called cheaper iPhone? To look at it from a different perspective, Apple is a premium brand of smartphones and that is what helps drive most of its sales. Releasing a, say, sub $300 phone in the market could severely impact that premium brand image. Yes, if such a phone were to be launched, it would no doubt sell well in Russia or India. But in the process, Apple might also loose appeal to the high segment customers who help Apple report record profits year after year.

Not only that, but by discontinuing the iPhone 5 and replacing it with the iPhone 5c, Apple has also cleverly driven consumers to its higher end product which provides more profit margin for the company. Adding just $100 more gives the consumer a more premium product made out of metal instead of plastic. Most of the people in the US, who otherwise would have gone for the iPhone 5 (which would have been the same price as the 5c, had the latter not been announced), would now think about adding $100 more to get a better product. Also, iPhone 5c’s design and colors could help pull in new customers, who have till now stayed away from the brand due to the monotonous design of the iPhone.

In all, the iPhone 5c hasn’t been designed to address the emerging markets at all. For them, Apple’s buyback schemes will have to do. iPhone 5c has clearly been crafted to drive more revenues and sales of the iPhone 5s, while keeping people who complain about change happy.