Apple makes proprietary hardware packaged on exclusive software. But increasingly, the business model has moved from the hardware to “services and solutions” within the ecosystem. That is the reason we do not read that much on the number of iPhone and iPad sold these days. If that remains, Apple’s future to win those services and solutions space will mean more users, and not necessarily selling fashionista and expensive hardware. So, Apple needs to have numbers.
So, the new playbook Google is unveiling which is to make cheap 5G phones with India’s Jio is a first shot on the battle for the soul of 5G: “India’s telecom giant Reliance is working with Google on a $25 billion plan to develop affordable 5G smartphones and services, the company said on Monday.”
Do we expect to have a cheaper version of iPhone for the 5G era as the company looks for ways to deal with Google’s plan to flood the future with ultra-affordable 5G phones?
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Reliance Chairman Mukesh Ambani said during the company’s annual general meeting that Jio’s 5G network, which will be launched starting with New Delhi and Mumbai before being expanded across the rest of the country by next year December, will be the world’s largest.
The plan, which is the latest in the company’s efforts to disrupt India’s telecom market, is expected to be executed in two months. It has a promise of crashing the cost 5G devices in India, making it “ultra-affordable”.
“To take the 5G mass market, a sub-$100 phone is imperative and Jio is rightly positioned to bring 5G to the masses,” Reuters quoted Neil Shah, vice president of research at Counterpoint, as saying.
Certainly, not many will care since the iPhone is a fashion symbol besides being a great device. But if Google attacks from the bottom, many will not ascend into the higher iPhone. More so, Apple is pushing Apple Pay to the developing parts of the world. The implication is that it will need users in those regions to buy into the Apple Universe to make use of Apple Pay.
Comment on Feed
Comment 1: Trends change quite fast in the telecommunications age. That said, Apple seems to still have a safety net in the sense that it’s products are seen as status symbols. However betting on quality low price products is usually nearly guaranteed to win. For now my belief is that Apple has the numbers, in the sense that those who own their products can also afford most of the services that they offer. Their only worry is that markets evolve and if Google collaboration with Rio is successful be sure with time they will offer whatever services that Apple is offering now. Anyway 2 organisations cannot produce enough for the world. Expect Chinese companies to bulldoze their way into the 5G products market soon.
Comment 2: This is a grt entry model for Google into the 5G arena using one of the largest markets for this roll out. I challenge MTN to glean some initiative from this and maybe partner with TECNO to replicate similar feat for the largest black market on earth (Nigeria), spreading same across Africa.
My Response to 2: Indeed, it would be amazing if that can happen. If they do contract payment where payments are spread over months, a telco can execute that in Nigeria.
Comment 3: Ndubuisi Ekekwe there’as always been cheap smart phones and there will always be cheap smart phones, and apple will continue to be a market leader in its category (hardware and service). Unlike Samsung and Google, Apple continues to thrive by adopting a “Focused Differentiation” strategy (Bowman’s strategy clock)
My Response 3: Absolutely, I did note that. Yet, in the world of services, that strategy while great will not last forever. If because of your premium hardware, India cannot connect into your services, you are scoring an own-goal. Apple has to make that decision. 5G presents a transition phase and could create a dislocation especially if Apple comes with very expensive iPhone.
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Apple did not make cheap phones for 3G and 4G, so how will it suddenly make cheap ones for 5G? Well, Apple is never created for mass market, so what Apple focuses on is not the number of people who should hold a smartphone in a country or continent, rather the number of people with decent disposable income; the latter is Apple’s target market.
Apple will be more concerned with the state of economy in every region its present and future markets are, because it goes for the upper middle class and the rich, and if people in those brackets continue to expand, then Apple services business will continue to grow.
Google and Jio want to sell sub $100 5G phones, we will wait to see how profitable and sustainable it is produce at that level and how great the devices are. The ambition sounds fantastic, it remains the execution at scale.