Apple’s challenges in China and Brazil

Erica Ogg:

Apple sells tens of millions of iPhones every quarter, but its biggest challenge is expanding the reach of the iPhone in markets where smartphones are incredibly expensive and new to a lot of potential customers. At the Dive into Mobile conference on Monday in New York City, two companies represented onstage offered stark examples of how Apple’s model, which it has nearly perfected in established markets, may require some adaptation: China’s high-end handset maker Xiaomi and Brazil-based wireless carrier Movile.

An interesting look at some of the issues Apple faces as it continues to manage product growth in two very different countries with two very different economies.



  • http://www.facebook.com/tiagobastos Tiago Bastos Da Silva

    I’m Brazilian and there is no big or even small wireless carrier in Brazil called Movile.

  • http://twitter.com/rroca Rodolfo Roca

    This article is not accurate. I’m from Brazil and as the previous comment said, there is no wireless carrier named Movile. As far as I know, Movile is a company that develops crapware apps for carriers to install on Android and feature phones. No wonder they are not focused on the iPhone.

    Aside from that, the tax reform they talk about on the article is “coming soon” since the 90′s and there is no real evidence that will actually be implemented anytime soon since neither states or the federal government want to let go of any piece of the pie. There is not even an active negotiation on it happening, much less a time frame for congress to vote and implement it.

  • Rupert

    Apples problems in Brazil are that fastshop has the licence to sell their products and they dont do a good job of it, there is a huge import tax, mobile phone carriers dont subsidise the phones and they stupidly wasted time doing a deal with the corrupt government and foxcon to build iphones/ipads using Brazilian factories and workers to get around the tax issue, forgetting of course how poor the brazilian labour force is.

  • tylernol

    this article reads like the author had a preconceived notion on what Apple’s “problems” in China and Brazil were and he dug around to find companies that fit that hypothesis, both of which appear to be marginal players in both markets.

  • Ricardo

    GigaOM’s article is a FAIL, but not by the perceived egregious price diferences or the taxes.

Given USD = US Dollar; BRL = Brazillian Real.

A sim-free iPhone 4 can be bought in the US for USD 450. Assuming 6% tax, USD 477.

In the last months, the exchange rate has been around 2 BRL/USD, so the same iPhone 4 should be around BRL 954.

One can be bought today by BRL 1099 (http://store.apple.com/br/buy/home/shop_iphone/family/iphone4)

So the actual factor for a brazillian-assembled iPhone 4 is around 1.152.

    The 4S and the 5 aren’t assembled in Brazil; also the five is not sold here directly by Apple yet, so I’ve taken a carrier, unsubsidized price of BRL 2,500. For those, the factors are, respectively, x1.46 and x1.817

    So, we’re talking of a nominal difference of about 15% to 82%. Huge, in the case of the 5, but nowhere near 30 times.

    Even going by adjusting the values by OECD’s Household net adjusted disposable income – 2009 data available at http://www.oecdbetterlifeindex.org/topics/income/ – which is a best-effort on our part, the article doesn’t touch on this, we find a factor of 4.7, with Brazillian income at USD 8,007 and US income at USD 37.708.

    Compounding the factors, 4.7 and 1.817, we get a worst-case scenario of 8.4; Again, huge, but not 30x.

    The real fail of the article is by not taking this second factor, income inequality, instead going by the word of a company CEO, a company mislabeled as the “greatest Wireless Company in Brazil”, which is absolutely, utterly not true, as pointed by many other commenters.

    This income inequality means, simply put, that there just aint’ many people able to buy iPhones. But the problem isn’t taxes anymore, but income, while even some few years ago its was low income AND taxes.