Emerging economies: Apple knew where the puck was going
Apple has been preparing for economic change since way before most people saw the mutation on the horizon, but you should all have been paying more attention.
Look at the reality of our times
We don’t need to dig too deep to recall really divisive political decisions as so-called mature economies grappled and continue to battle with the end of growth.
This has fostered increasing disunity between different nations and groups within nations, as evidenced by the inherent short-sighted nativism of the truly terrible decisions that have made things much, much worse for most of us, including Brexit, Trump, and the war in Ukraine. In retrospect it will seem inevitable that in the absence of any visionary political leadership nations would implode in self-immolating bonfires of demagoguery and hatred.
But if you can’t change the way the world is going to be, you can still make changes that help you thrive in the ashes left behind.
Get ahead of the puck
And this is what Apple has been working on in emerging economies as it prepares itself for dark days in the existing ones.
It’s not just supply chain challenges driving the company to invest in economies including India, it’s also the realization that advanced economies are seeing correction.
Apple wants to make pretty sure its business continues to thrive when correction happens and is building its business with this in mind.
A better approach
Of course, outsiders looking into the Apple goggle box will think that doing good business in emerging economies will require the company sell products at lower cost.
This is nonsense, of course.
It’s a lowest common denominator argument that betrays a complete lack of vision and understanding of what the company represents. I’ve heard it a million times in terms of Apple’s business, the company never listens to that argument, and lo and behold, has become the most successful product company in the world.
That’s because as well as selling products, it also sells ideas, and as well as those it brings ecosystems, innovation, and opportunity to the table — all in products that last longer and command higher resale value than all the other cheap tat out there.
But there’s a school of thought that cheap is all that emerging economies want, which time will inevitably prove is not true at all.
People in those economies are just as ambitious and optimistic as anyone else.
Equally as much as anyone anywhere, they are discerning and will pay for the best.
Apple just needs to figure out how to make that exchange possible, which is of course what Apple Card, Apple Pay Later, and Apple as a Service will help enable as the company brings those services outside the US.
(Apple’s environmental efforts also go down pretty well in nations which are already directly experiencing the impact of climate change).
It’s the ecosystem, stupid
The other blind spot so many commentators have is that, as well as high user satisfaction and loyalty, Apple has available a feast of additional products and services which empower it with price flexibility and boosts Average Revenue Per User.
In India, it seems highly probable the company will enhance its services with more local content, including key movies from Bollywood as it seeks to build its local ARPU.
Introducing locally focused services in emerging economies will boost Apple’s business in three critical ways:
- building sales locally,
- increasing platform stickiness,
- exposing cultures to wider audiences as local content vaults to the international stage.
There will be a huge untapped audience for Bollywood movies once people are given curated experiences within which to explore and understand that side of Indian culture, and Apple has the scale and reach to achieve this. The same applies to every relatively local content as it is given platforms to reach new and curious minds.
We know Apple is aware of this value – just take the recent decision to begin offering South Korea’s favorite comics format, Webtoons, via Apple Books.
What’s my point?
Apple will not compromise its product cost or quality, but is prepared to use all its services to support its overall ecosystem.
This inevitably means the company will seek new ways to empower consumers to join its ecosystem even as it continues to develop local links through regionally relevant content via its media services.
So, as emerging economies become the dynamic to drive the global economy (which is what I think is happening), you can anticipate not just that Apple will tread water as it did in its last quarter, but that the company will grow as the size of its market and user base expands.
That Apple has a head start on handling this new reality is, once again, a testament to good management. While most of us slept, Tim Cook’s company was already preparing to wake up somewhere other than Kansas.
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