Apple's misery in the emerging markets !!

Apple, the world's most innovative company, is touted as one of the most respectable firm America has ever produced. Without a doubt, Apple's products are revolutionary and always take us into a new era marked by greater sophistication. They create ripples in the markets much before their launch and the tsunami arrives the day they are in the market. Be it iPod, iPhone or the recent iPad, people have tortured their legs standing in ever-lasting queues, to get their hands on the "iProducts". But as much as Apple has succeeded in American and European markets, it has failed miserably in the emerging markets. Apple has failed to sell iMac, iPad and more so iPhone in the emerging markets like India and China. Looking at the potential these two markets possess, any CEO in the world would dream to conquer them. China is numero uno with 634 million mobile users, India is second with 427.3 million. Now that combined is fcuking 1 billion "can-be" customers. Shouldn't Steve Jobs pay attention to these markets which they respectfully deserve? Isn't it a job of Jobs, to multiply the money of his company's investors in whatever way possible?

There are many reasons as to why Apple has failed to make it's mark in these tremendously growing market. The first and the obvious reason is the cost of its products. They are humongously expensive in these countries when compared to the US. iPhone 3G(8Gb) costs around 4 times the cost as available in the US markets. And as a matter of fact, people in India and China are still not rich (despite bragging about 10% growth rate) and understandably would not like to pay such an amount of money when they can buy a bike instead. Moreover, as a part of their cheaper habits, Chinese and Indians prefer to buy Apple's products from US, either when they visit the country themselves or ask their visiting friends to purchase for them leaving their own country's market dry and hapless.

Secondly, there is a lack of aggressive marketing strategy. For no obvious reasons, the company has not shown any inclination towards making its products people's first choice in the emerging countries though they are "competition killer" in nature as they have shown in the American markets. There are no ad campaigns, no massive publicity when their competitors Nokia and Samsung are flooding the markets with the news of their new products and innovations. Apple still remains a company for elite in these countries.

Thirdly, iPhone comes bundled in with a service provider. Recently, there has been a boom in the number of service providers particularly in India which has made mobile usage as cheap as a postcard. Further, these service providers have various cellular plans which are designed to suit various kinds of users. Thus, this binding of service provider with the iPhone restricts the users to avail the services of their choice and advantage.

Fourthly, India and China do not walk hand-in-hand with US when it comes to telecommunications technology. While 3G services were introduced in the American and European markets much before 2005, they are still to be launched comprehensively in India and China. This lag in technological advancement make new Apple products which are designed keeping the latest US technology in mind less attractive in the "still developing" economies.

And last but definitely not the least, tough competition from key players in the cellular markets like Nokia and Samsung, who really understand the needs of the customers in these areas and have built their products to suit them. These companies have also invested heavily in massive campaigning, covering all the segments of the society. The competition has just grown stronger with the entry of new players. And Apple will now find it all the more difficult to sell its brand in China and India unless the governments of these countries decide to cut the duties on imported electronics items sharply.

Apple is still not the "Apple" in the emerging world. Apple might be the "God" of the American and European people but it should not overlook the other half of the globe. Purely in business terms, these market could be heaven for any technology company. American and European economies are on the verge of stagnation or rather decline, thus to keep up with the pace of growth Apple has achieved in the last decade they need to focus more on the countries like India and China providing people in these countries with what they want at a fair price. Apple knows well the power of its killer products, they are better than any of their contemporaries and should use it to their advantage rather than being gratified by their tremendous American and European sales figures.

Bangalore, Boston and Beijing !!

This article is inspired by the readings from Thomas Friedman's "The World is Flat" where he discusses how over time, especially in the last decade the world has become a "level playing field". Specifically during the IT bubble era, massive investments were made to connect the whole world through broadband and undersea optic cables. Computers became cheaper and widespread, and there was advent of e-mail, IM clients which made communications amongst people in various parts of the world cheaper and convenient. Availability of information was made easier by search engines like Google and Yahoo!. Propriety softwares were engineered which could divide the work into logical pieces and distribute one part to Bangalore, one part to Boston and one part to Beijing where they would be developed simultaneously to be later assembled as a complete product.

There are uncountable benefits of such kind of a product development process. It not only makes the production cost come down but also adds a new dimension to the product. Production cost is reduced significantly as the parts of the job are assigned to the places where they can be done at the lowest cost. Moreover, people from various cultures, where the needs vary can add new dimensions to the product in order to make it globally usable, thereby increasing the market size for the product. Tens of thousands people at more than 30 companies on 3 continents worked together to make Apple's first iPhone possible. All in all, people with best possible skills come together to develop a product. But how do consumers benefit from this process?. Simple, they get high quality products at competitive prices.

There is no doubt that America is one nation driving this change in product development process. Be it Google or Yahoo! or Microsoft or Amazon, all are the creations of American nationals. It is due to the research going on in American universities that we have such high speed internet connectivity and companies can now do round table video conferences with their colleagues in other countries, discuss the prototype along with planning and distribution of tasks. But has USA really gained from it, from a long term perspective? Recently, there has been a lot of hue and cry over jobs being send overseas. People of America are for sure facing tough competition from their counterparts in Bangalore and Beijing. But that is the strength of our character; we are always at our best when challenged. Instead of wasting our time on putting up rallies on this issue, we should accept the fact and face it with wit and vigour. We should learn lessons of hard work from Indians and Chinese. And always remember one thing, be it good or bad, the time always changes for "Nothing but only change is permanent"

Declining birth rate: Good or bad??

Population has been a major concern in many countries, specifically in developing Asian countries. Countries such as India, China, Bangladesh and Pakistan have always struggled to feed their ever growing population. China and India combined have around 36% of the world's alive people. China on one hand has adopted "One child policy" and has been able to restrict the birth rate to a very low level, India on the other hand is still grappling with high-birth rate. Indian political and caste structure makes it difficult for the government to implement a policy like China's. Though supporting a huge population can be a nightmare for any government and economy, but is encouraging people not to reproduce, good from a long term perspective??.

There would be many advocates of the idea of declining population, but there are no less on the other side. There are many issues to be discussed here, particularly the increase in the number of aged people. Declining birth rate increases the dependency ratio i.e. there are more number of retired people than the number of people that constitutes active work force. Secondly, it results in higher taxes on the working people as the government needs to invest more in pension and health care services for the aged, hence in order to avoid a deficit, tax rates are raised. Thirdly and most importantly, there would be a shortage of labor which would lead to higher wages and firms would resist reinvestment into their business as their product's cost would not be competitive in the global markets.

No matter how much technology advances, human workforce has been and will remain the major ingredient of production process. Human resource is the most vital resource for any business. Youth's vibrant energy and creativity as well as aged's experience and understanding are required for the development of any economy. Realising this fact, many countries like Singapore with low birth rates are now providing financial incentives to their citizens to reproduce more, in addition to free education facitlies. Legally forcing people to reproduce less can no doubt yield positive results at first, but these demographic changes would be very difficult to reverse when needed, as a tradition is established over time. And people then are fearful to differ as they are worried whether they would be able to support a greater family.

Whether large population is a liability or an asset, it is up to the relevant countries to decide. India particularly is doing a tremendous job in this regard. They have no law regarding how many children a couple should have, rather they are focused on producing more jobs and providing education to the people. Their Prime Minister Mr. Manmohan Singh believes that their people are the most important asset and have contributed to the growth the country is currently experiencing. Many MNC's are compelled to set up their production units in India due to large scale availability of cheap and skilled labor. Now it would be interesting to see how China, which is being looked upon as the next "Superpower", solves the problem of aged population.