Case Study completed in MGMT 450 class at Drexel University. The goal was to identify Apple's opportunities in emerging countries.

1. Brazil Russia India China Q&A
Emerging Countries

2. Brazil Russia India China Q&A
Apple in Emerging Countries
Russia
China
India
Brazil
Smartphone Tablet PC
Local Competitions

3. Brazil Russia India China Q&A
Brazil

4. Brazil Russia India China Q&ABrazil
“On the second country on the list of
those 4, for us, would be Brazil. I think
there’s a huge opportunity for us there,
and we’ve more than begun to go
deeper in Brazil.”
-Tim Cook on BRIC countries (2012)

5. Brazil Russia India China Q&ABrazil
Apple in Brazil
47.0%
22.0%
15.0%
7.5%
Smartphones (OS)
Android
Nokia
Windows Mobile
iOS
45%
25%
9%
6%
5%
PC (OS)
Windows 7
Windows XP
Mac OSX
Windows Vista
Linux
Source: The Motley Fool November 2012

6. Brazil Russia India China Q&ABrazil
Threats
• Government protectionist policies
– Import Tariffs
– One of the most corrupt governments
Source: www.heritage.org

7. Brazil Russia India China Q&ABrazil
Threats
• Brazilian Income low
coupled with high costs
• Brazilian GDP per
capita: $11,900
• Copyright issues
• IGB Electronica’s
Iphone
• Knockoffs

8. Brazil Russia India China Q&ABrazil

9. Brazil Russia India China Q&ABrazil

10. Brazil Russia India China Q&ABrazil
Comparisons

11. Brazil Russia India China Q&ABrazil
Strategic Partnerships
• Electronic Retailers
– Retailers like Casas Bahia (Best Buy of Brazil)
• Phone companies
– Subsidize and lower cost
• Government
– Create factories to avoid protectionist policies

12. Brazil Russia India China Q&ABrazil
Pricing Strategy
• Current strategy for computers okay
– Computer prices are relatively same difference
• Need lower cost phone
– United States high price phone not effective
• “Apple will launch a new, plastic bodied version of
the iPhone at a budget price as early as this year.”
• “The long-awaited budget iPhone will just [sic]
£220 ($330)… roughly half the cost of a full-blown
version of the iconic smartphone.”
Source: Dailymail.co.uk (March 1, 2013)

13. Brazil Russia India China Q&A
Russia

14. Brazil Russia India China Q&ARussia
Competitive Threats
Smart
Phones
Tablets
PCs
Privacy
Risk

15. Brazil Russia India China Q&ARussia
Δ-23.0%
Note:
Sales decline in Russia is also a problem
worldwide. Decline to continue in 2013.
Long-Term Competitor’s Landscape
19.7
0.9
20.5
51.2
3.3
15.6
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Sales
(billions)
Units Sold
(millions)
Average Price
(thousands)
Tablet Performance
2011 2012
Source: MTS Data 2012 and Infofax 2013
Ritmix RMD-1026
3.0
3.9
Q4 2012
Q4 2011
PC Sales Q4 Performance (millions)
YotaPhone

16. Brazil Russia India China Q&ARussia
Strategic Partnerships
Technology
Russian Tablet Companies
Tablet PC
Network Provider
Top Russian firms (ex. T-Mobile)
Smartphones

17. Brazil Russia India China Q&ARussia
Smartphone Pricing Strategy
23.6
28.4
34.4 36.8 39.3
2009 2010 2011 2012 2013
Disposable Income (RUR Trillion)
Ideal Range
RUR 10,000 – 14,999
USD 324.75 - 487.10
Realistic Range
RUR 15,000 – 25,000
USD 487.13 - 811.89
2013 iPhone 5 (16GB)
RUR 28,900
USD 938.54
Source: MTS data 2012 and Euromonitor International
13.7%
18.7%
40.7%
26.8%
17.1%
16.6%
51.7%
14.7%
> 15,000
10,000 - 14,999
5,000 - 9,999
1,500 - 4,999
2011-2012 Phone Purchased Range (RUR, %)
2011 2012
Δ+82.3%
Δ+12.7%
Δ-19.9%
Δ-21.3%

18. Brazil Russia India China Q&ARussia
Tablet and PC Pricing Strategy
• No change for PC price
– Decline in the PC market constitutes for other
strategies than price
• No change for tablet price
– Average Price (2012) = RUR 15,600
– Current Price (2013) = RUR 14,900 (16GB) –
22,990 (64GB)

19. Brazil Russia India China Q&A
India

20. Brazil Russia India China Q&AIndia
Competitors in India
15.9%
15.2%
13.2%
13.0%
42.7%
PCs
Lenovo
HP
Acer
Dell
Other
37%
27%
36%
Smartphones
Nokia
Samsung
Other
• Apple
• HTC
• Sony Ericsson
• LG
• Blackberry
• Micromax
• Karbonn
• HCL
• Compaq
• LG
• Zenith
• Wipro
Source: Smart Planet 2012 and Live Mint 2012

21. Brazil Russia India China Q&AIndia
Strategic Partnerships
• Service Carriers (contracts w/ only 30%)
– Crucial to increase partnerships
• Small Stores & Retailers
– Current channel for majority of sales
– Need to increase partnerships w/ retailers

22. Brazil Russia India China Q&AIndia
Strategic Partnerships
• Local Phone Manufacturers
• Micromaxx, Spice, Lava, Karbonn etc.
– Utilize Apple’s technology/skills for cheap
manufacturing
• Political/Government
– Provide benefits to India for less regulation:

23. Brazil Russia India China Q&AIndia
Pricing Strategy
• Innovation is Key
– Pricing compared to primary markets
• Economic Trends
– Population & Economy are growing
– Future is favorable to higher prices

24. Brazil Russia India China Q&AIndia
Pricing Strategy
• Geographic Implementation
– Nation as whole has less disposable income
– Target wealthier cities first
• Penetration Price
– Need to get prices lower to compete
– Trial price slashing would be beneficial

25. Brazil Russia India China Q&A
China

26. Brazil Russia India China Q&ABrazil
China’s Economy
• GDP of 11.3 trillion in a 1.3 billion populated country.
• Government controls financial regulations subsidies,
ownership and credit manipulation.
TRADE FREEDOM

27. Brazil Russia India China Q&AChina
China’s Economics
34.9%
42.2%
14.6%
5.2%
3.1%
Smartphones sold by price
<1,000
1,000 - 1,999
2,000 - 2,999
3,000 - 3,999
>4,000
8,472.20
9,421.60
10,493.00
11,759.50
13,785.81
15,780.76
17,174.65
19,109.44
21,810.00
24,565.00
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
China Disposable Income
Per Capita

28. Brazil Russia India China Q&AChina
Apple’s Phone Market Share
22.5%
7.7%
10.7%
9.9%
9.5%
8.9%
6.4%
4.7%
3.5% 3.1%
Phone Vendor Market
Samsung
Apple
Lenovo
Huawei
Cool pad
ZTE
GIONEE
HTC
Motorolla
Nokia
68.6%
12.8%
12.4%
3.8%
Operating Systems Market
Android
IOS
Symbion
Windows

29. Brazil Russia India China Q&AChina
Apple in the PC and Tablet Industry
• 8.38% - Lenovo
• 3.63% - Eben
• 3.59% - Samsung
• 3.27% - Acer
• 1.86% - Asustek
• 0.98% - Teclast
• 0.62% - Ramos
• 0.33% - Aigo
Source: Leading tablet PC vendors by unit sales, 2012, Engadget

30. Brazil Russia India China Q&AChina
Strategic Partnership
• China Unicom – 2009
– The 2nd largest mobile service provider
– 192.4 million subscribers
– Extended the partnership last year
• China Telecom – 2012
– The 3rd largest mobile service provider
– 120 million subscribers
iPhone sales in China increased five times in 2012

31. Brazil Russia India China Q&AChina
Strategic Partnership
• China Mobile
– 700 million subscribers
– 3G Technology TD-SCDMA
– 15 million customers use the iPhone
– Prepare to launch 4G network later this year
• Qualcomm introduced RF-360 new “global LTE”
chipset that operates on 40 bands and support all
seven cellular modes (LTE-FDD, LTE-TDD,
WCDMA, EV-DO, CDMA, TD-SCDMA and
GSM/EDGE)

32. Brazil Russia India China Q&AChina
Pricing Strategy
• Apple global pricing model
• Average smartphone price $308, basic iPhone 4
costs $650.
• The average disposable income in China is 24,565
CNY ($3600)
• Cheaper iPhone vs. Chinese disposable income
increased
• No handset subsidies from service provider
• Sell mid-price model, older version (iPhone 3Gs
or iPhone 4)

33. Brazil Russia India China Q&AQ&A
Questions & Answers