By its own very high standards, Apple had a bad quarter in its China market. Apple's revenue in China was down 43 percent in Q2 and 14 percent year over year. Samsung, on the other hand, is surging ahead with an overall share of 19 percent in the Chinese market. Incidentally, Apple is not even one of the top five vendors in India, where Samsung continues to dominate.
Why isn’t Apple doing well in these emerging markets? To demystify this from the technology perspective, Ravi Venkatesan, in his book Conquering the Chaos: Win in India, Win Everywhere, mentions that one of the key reasons for Apple's being a non-starter in India is due to extreme standardization.
The buzzword here is "standardization." Apple’s international strategy is that of standardized products. The only modification that Apple makes in their products is the power source because of the different power voltage in different countries. Other than that, Apple products are precisely standardized throughout international markets.
For starters, standardization doesn’t mean that Apple software isn’t globalized. Given the way a smartphone is used, the standardization can happen at the hardware level and at the software level. The underlying iOS operating system is globalized and among other things shows the text, labels, etc., in localized languages. That is certainly a helpful sales enabler in a market like China, but apparently the market needs more.
As a report from Reuters rightly points out, Apple releases only one smartphone a year, priced at the premium end of the market; Samsung releases multiple models annually with different specifications and at different price points in China. RedTech Advisors' Michael Clendenin says, “The Chinese just love features. They want their phone to have 50 different things that they’re never going to use.”
Apple, riding on the wave of smartphone standardization, hasn’t been able to fully address this need, whereas Samsung has shown tremendous agility in understanding market needs and has been able to swiftly launch smartphones with geo-specific features. This approach to engineering and selling Samsung's smartphones has gone well with the emerging markets; Apple's unwillingness to change its standard design is often perceived as arrogant.
To be fair to Apple, their obsession seems to be coming up with a perfect product as is reflected in CEO Tim Cook's remarks, "The only thing we’ll never do is make a crappy product. That’s the only religion we have: We must do something great.”
With hoards of cash backing Apple's business, they might even rule out the current fall in business as a mere speed bump in their journey, and their belief in coming up with a great product might even result in the next best thing for the emerging markets. But until that happens, it would be quite a task for Apple to find the right balance between standardization and globalization, something that Samsung seems to have already found.
