Why the 'C' in iPhone 5C Stands for 'China': Page 2

And the “S” in iPhone 5S stands for “Sino.” Here’s how Apple is changing your iPhone to fix its broken China strategy.
Posted September 4, 2013

Mike Elgan

(Page 2 of 2)

Where Apple is failing miserably in China, Samsung is succeeding. One way they’re doing that is by satisfying Chinese demand for phones as status symbols. For example, Samsung sells a $2,000 China-only flip phone, which they market with actor Jackie Chan. The phone is black with gold highlights all over.

Gold and red are very popular colors at Chinese weddings because of their associations in Chinese culture for wealth, happiness and good fortune. It’s hard to imagine Apple selling a red phone. But yellow and pink are often substituted for gold and red and are viewed as associated variants. That’s one reason why the iPhone 5C will also come in yellow and pink -- the budget versions of gold and red.

Another reason for pink is to satisfy demand in China and elsewhere in Asia for phones aimed at girls and women.

Asian companies have been selling pink mobile phones for years, but almost exclusively into Asian markets. Western blogs often catch wind of this branding and rake it over the coals as sexist and demeaning to women.

That’s the cultural conflict that Apple is stepping into. It wants to launch a pink phone aimed at female consumers in China and elsewhere in Asia to boost market share and help it compete with the companies that do market pink phones expressly to female consumers, but doesn’t want to be slammed as sexist as those other companies have been.

The solution for Apple is to release the iPhone in five colors, with one of them being pink and none of them explicitly targeted along gender lines. I’m predicting that pink will be one of the top two most popular colors for iPhone 5Cs in China.

Of course, these traditional associations can be taken only so far -- young people in China are like young people everywhere -- they like the colors they like and use colors and other symbolic attributes to express their individuality -- their differences from cultural norms.

2. Status and Cost

While smartphone buyers worldwide tend to fall into “status symbol” or “low-cost” camps when choosing a phone, these distinctions are especially sharp in China. Consumers there tend to want either an outrageously expensive phone (or a phone that looks like an expensive phone), or they want an outrageously cheap phone.

That $2,000 Jackie Chan phone I mentioned is an example of a high-status phone that costs a lot and serves as a status symbol for the owner.

When Chinese consumers want a cheap phone, however, they want a really cheap phone. Nearly half of China’s 720 million mobile phone buyers even today buy feature phones. Another huge percentage opt for super cheap smartphones in the sub $100 range.

Apple’s niche in the market won’t allow the company to sell $2,000 or $100 phones. But splitting the iPhone line into “status” and “budget” lines makes a lot more sense for the Chinese market than it does elsewhere, and that’s why I believe Apple is doing it.

3. China Mobile

I’m predicting that Apple will announce at the Sept. 11 event in Beijing a carrier relationship with China Mobile, which Apple has been unsuccessfully negotiating for years. China Mobile is the world’s largest carrier with 740 million subscriber accounts and the only carrier in China that doesn’t carry Apple phones.

Apple’s China Mobile problems have been partly business-related (both parties want to control what’s installed on the phone, for example) and partly technical -- Apple’s electronics have been incompatible with China Mobile’s. But the new iPhone is expected to be compatible with China Mobile’s network.

Why Apple Should Be Tickled Pink with Its Golden Strategy

I’ve made a host of predictions in this column, but the biggest one is this: Apple will succeed with this strategy.

While critics will slam Apple for making only cosmetic changes to its iPhone line while Android phones push the boundaries of real innovation, everyone will be shocked to find Apple’s global marketshare numbers go way, way up.

And the reason is simple: Apple has redesigned its entire line of flagship products to appeal to Chinese consumers.

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Tags: iPhone, Apple, Samsung, Mobile Device Vendors

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