Lenovo finds great business opportunity thanks to the high price tag of Apple iPhones

Heidi Speare November 12, 2013 0

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The Apple iPhone series of smartphones has been one of the best and most costly pieces of hardware that the world has ever seen. The company has been making huge profits with these smartphones on and off contract, but even then, Lenovo has found a way to capitalize on the high price tag that these iPhones carry.

Recently, in an interview with Bloomberg, Yang Yuanqing, the Chief Executive of Lenovo discussed some points about how his company was able to benefit and improve business because of the high Apple iPhone prices. The company’s simply but effective strategy was to target Asian countries where even smartphones like the Apple iPhone 4S and iPhone 5 are heavily priced and unaffordable to a large number of consumers.

To give you a good example, in a country like India, the Apple iPhone 4S is still sold for about INR 30,000 ($500 USD) whereas the Apple iPhone 5 is sold for INR 42,000 ($700). Due to such high prices, even Apple fans and consumers end up buying the iPhone 4 or at best the iPhone 4S. This is the perfect scenario that Lenovo needs for its growth.

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So in India as well as many other countries around the world, Apple iPhones are neither affordable nor reasonable to consumers. Hence all Lenovo has to do is come up with smartphones and tablets that cost almost or even less than half the price of the iPhones. The key to success in such countries is to provide good products but at economic prices. Lenovo has been dong this and has had great success in emerging markets.

“We provide affordable products for emerging markets. That’s very important. For those markets, the iPhone is probably not the best selling product, (and) Lenovo can be much more competitive,” said the Chief Executive, Yang Yuanqing.

Because of the initial success rate, Lenovo plans to continue using this strategy on a global level. The company will soon start offering its smartphones in regions like the Middle East, Africa and Latin America. As of now, Lenovo sells its smart devices in 10 different markets, but very soon this number will reach as high as 30. So from a regional brand, Lenovo plans to go big and go global. And the only key point they have in mind is to keep the pricing correct and affordable!

On the other hand, Apple still continues to sell its iPhone series of smartphones for a high price tag. In regions outside the United States, the company has put high price tags even on the Apple iPhone 4, a smartphone that hardly exists in the United States. Even the iPhone 4S is offered free of cost if you sign a two-year contract in the United States. But the interesting point is that many consumers and critics still feel that iPhone 4S has a premium pricing even when offered for free on contract.

iphone 5c green

The Apple iPhone 5C, the smartphone that was expected to be the first-ever budget friendly iPhone in the world shattered the dreams of many consumers! A number of consumers though that they would finally be able to buy their dream smartphone. But things changed when the Apple iPhone 5C was priced at $549 without contract and $99 on contract.

In a way, Apple still considers the iPhone 5C to be a premium smartphone and continue to use the high price-high profit method for it. “There’s always a large junk part of the market. We’re not in the junk business,” said Tim Cook, the CEO of Apple.

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