The 5th generation iPhone just went on sale and Apple calls the iPhone 4S the best iPhone they ever made. Back in 2007 when Steve Jobs unveiled the original iPhone, the entire mobile phone industry was taken by surprise. While some expected it to fail, many subscribed to the idea of a stylus-free full touchscreen operation. Over the past 4 years, Apple has sold over 100 million iPhones seeing a 125% YoY growth. As the iPhone 4S sells 4 million units over the launch weekend, we can be sure that the iPhone is still accelerating its growth and in all probability will continue to grow faster than the smartphone industry.
But at the same time there is a general consensus that Android is catching up fast and Apple’s competitors have finally caught up with the iPhone’s charm. The iPhone 4S is a healthy upgrade in technicals, but the same old design and screen size has prompted views that Apple disappointed many with the 4S. At the same time, the iPhone isn’t the cheapest smartphone around and the broad range of Android and Windows Phone 7 devices might just do better eventually. Knowing Apple, we know that they are used to high rate of growth (eg Mac) and at the same time if it is a market that they created like then iPod, they like to maintain their dominance.
As competitors get traction and the differentiation between an iPhone and other offerings on the market diminishes, will Apple might end up as just another player in the smartphone race? Well, as a consumer, we would love to see multiple players compete and that seems to be happening as well. So how does Cupertino compete in 2011-2012 where the lead they had in terms of platform and hardware isn’t all that significant anymore? As it turns out Apple has been playing its cards silently. And they are not just iOS upgrades or iPhone hardware, but more on the business end of things.
The 2 C’s of Apple as I call them promises a great boost to Apple. They are CDMA and China.
The single biggest sales boost in the iPhone 4S is the CDMA+GSM ‘world phone’ build. The biggest telecom player in US runs on CDMA and while Apple got the iPhone 4 to Verizon in early 2010, it is the 4S that would get real momentum. When Tim Cook announced the Verizon iPhone, he revealed that there are no more exclusive deals for the iPhone globally, the US was the last one to end carrier exclusivity with the launch of the Verizon iPhone. A CDMA iPhone opens new doors for Apple and given that most Android phones were sold on Verizon, Apple now has a foot in the door there.
Another very important booster for Apple is China. Of all developing nations, Apple is most bullish on China and rightly so. Their investments in China are paying off and I am not repeating what Tim Cook said last year, see the figures for yourself. The six retail stores in China are the most trafficked ones for Apple and given that China is the most populous country in the world, the sky is the limit for retail growth there (and fake Apple stores are doing killer business there). In its recent quarterly results, Apple revealed that as much as 12% of its business comes from China, up from 2% the year before. That is crazy growth. In fact the very last quarter it was 16%, certainly China is fueling Apple’s growth. China isn’t an easy market and the iPhone isn’t even on the largest telecom carrier there. Rumors and unofficial words have been suggesting that Apple would partner with China Mobile alongside its current tie-up with China Unicom soon. If we are to speculate numbers, as much as 25% of Apple’s revenue might come from China in a years time.