On Tuesday, Apple aficionados will once again get together in California to witness the iPhone 8's unveiling. The phone will be announced to a mostly American audience by a range of people who work at Apple's US headquarters, with a US price and key features coming to the US first.
That makes sense. The US is Apple's core market, with the largest concentration of people willing to pay top-shelf rates for high-end phones. But in a world of 5 billion mobile connections, a new research report says Apple is still largely boxed into a group of wealthy, Northern Hemisphere countries.
Take a look at the most recent regional market share numbers from Counterpoint Research. Now, admittedly, this is mid-cycle for Apple—many are likely waiting until the new iPhones arrive to make a purchase. But in all the "developing" rather than "developed" parts of the world, Apple isn't even in the top five manufacturers, with a market share under 8 percent. Market share isn't profit share, of course, and it may just be that less than 5 percent of Latin American consumers can afford an Apple phone. But the company is leaving huge swathes of the world on the table.
The "high cost" of Apple phones is overblown. Both the iPhone 6 and the iPhone SE regularly come in under $400 in countries around the world, and they have the price and capabilities of midrange devices.
I think Apple is less compelling overseas than other midrange phone makers such as Huawei and Oppo for two reasons, one of which is fixable. Apple won't budge on the idea of making low-cost phones with large screens; it'll leave that market behind. But Apple's focus on services also does it no favors in countries where those services aren't available (which is part of why it's been hustling to make deals with Chinese service players like ride-sharer Didi Chuxing.)
Take Apple Pay through Messages, for instance, one of the hot new features in iOS 11. That requires making deals with banks, which is always painful. So it'll come to the US first. Siri has slowly gained languages with time. iBooks, Apple Music and Apple's TV and movie store all require complex, country-by-country licensing deals. Apple actually has a web page where it breaks down which of its many services are available in which countries, and some of those lists are pretty short.
And the services are such a key part of Apple's appeal. As I've been using an iPhone for the past few weeks and comparing it to my previous experience with Android, it's clear that without Apple's services, an iPhone is just a phone. While there are still some attractive third-party apps integral to the platform, Siri, Apple Music, Apple Maps, Apple News, and especially iMessage create the sticky, deeply integrated differentiators that cause people to cleave to iOS above all others.
Apple's competitors generally leave it to third parties to supply the kinds of services Apple integrates. Whether that third party is Google, with its GMS application suite in many countries, or one of the various Chinese Android builds, or mobile operators, there are different players available to offer up their services in nearly every country. Apple also has the third-party options, but the experience on an iPhone is almost always better when a service comes straight from Apple.
I report and analyze mostly for US consumers, but when I'm listening to the Apple event next week, I'll be paying a lot of attention to which of Apple's services work outside of its core markets in the US and western Europe. Those markets will make the difference between an Apple that merely maintains its core fan base, and an Apple that can still expand.
Apple will keep its California dream alive. But maybe next year, it should try something in Sao Paulo or Beijing.