Why Apple seeks to appease investors through buy-back programs (Part 3 of 3)
Apple has started to undertake initiatives in emerging markets
Apple (AAPL) has started to take a few baby steps to initiate growth in emerging markets. The company recently signed a multi-year distribution agreement with China Mobile (CHL). CHL is the largest telecommunications company worldwide, with more than 700 million subscribers. In India also, Apple has started selling the cheaper iPhone 4 in order to get the iPhone in the hands of those who can’t afford a more expensive model.
But Apple needs to do more to counter competition
However, we believe Apple needs to be even more aggressive in these markets, as there are a number of players selling smartphones at much lower prices. These markets are highly competitive, and Google’s (GOOG) Android operating system is the common software used by a number of smartphone companies. To leverage growth in emerging markets, last year, Microsoft (MSFT) announced that it would acquire Nokia’s (NOK) mobile division for $7.2 billion. Nokia is still an important player in emerging markets, so it made sense for Microsoft to buy Nokia, since Microsoft traditionally didn’t have much presence in these markets. As you can see in the above graph, as of Q1 2012, Android dominated this market, with Nokia’s Symbian operating system coming second.
Apple also needs to launch a new product portfolio
Apple also needs to keep innovating and bring out new products all the time to justify its growth potential. There are hopes that Apple will spark a revolution over the next few years with the launch of a smartwatch, dubbed the iWatch, and with the reinvention of the television set (as the autobiography of Steve Jobs describes).
Apple will also need to resolve legal battles
However, there have been some issues facing the company over the last few months. The company has been questioned over its tax practices, and the Department of Justice has accused it of price fixing with its eBooks. And then there’s the ongoing battle with Samsung in courts over mobile patent issues. It looks like these issues could continue to threaten Apple for the next few years.
To learn more about Apple’s plans for innovation, see Why Apple’s new CarPlay system should help push iPhone sales.
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