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Apple takes war to Samsung, Huawei, Netflix in SA

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iPhone 11 Pro and iPhone 11 Pro Max are Apple’s higher-end smartphone models.
iPhone 11 Pro and iPhone 11 Pro Max are Apple’s higher-end smartphone models.

Apple’s three new iPhone models will give the company perfect footing to compete in the high-end as well as mid-top-end of the market where its appeal was waning due to stiff competition from Huawei and Samsung, especially in SA.

This is according to market analysts after the US technology giant last night unveiled the iPhone 11, a cheaper model that comes in new colours and starts at $699 (R10 300), down from the $750 (R11 000) the iPhone XR debuted at last year.

It also introduced higher-end Pro models – the iPhone 11 Pro and Pro Max – that boast three cameras on the back and advanced video tools, and start at $999 (R14 700) and $1 099 (R16 200), respectively.

Launching the iPhone 11 at the Steve Jobs Theatre in Cupertino, California, Apple CEO Tim Cook said: “iPhone has changed the way we live our lives in ways that we could have never imagined. It’s become so essential for hundreds and hundreds of millions of people all over the world. It’s changed industries and led to the creation of entirely new ones and it has made a profound impact on all of our daily lives.

“Customers love iPhone and we keep striving to make it better and better. Last year, we launched three incredible iPhones – the iPhone XR became the most popular iPhone and became the most popular smartphone in the world. We also launched the iPhone XS and the iPhone X Max – the most advanced iPhones we have ever created.

“Customers love the iPhone because we focus on technology that matters most in their lives. Today I am thrilled to show you the newest iPhone – the iPhone 11.”

On unveiling the high-end Pro models, Cook described them as: “The most powerful and most advanced iPhones we have ever built, with a stunning design.”

Apple TV+ will be $4.99 per month, to take on the likes of Netflix.
Apple TV+ will be $4.99 per month, to take on the likes of Netflix.

Strategic approaches

World Wide Worx MD Arthur Goldstuck says the three iPhones represent two highly-strategic approaches to win back market share, as the Pro Max now competes directly with the camera arrays of other flagship phones like the Samsung Note 10+, with its wide, ultra-wide and telephoto lenses.

“This gives it stronger appeal at the top end of the market. The basic iPhone 11 has dropped the entry-level price of a new iPhone by $50, giving it greater appeal in the mid-top-end, where people are not willing to spend more than $700 for a handset.

“The iStores in South Africa have introduced excellent trade-in deals that will almost guarantee current iPhone users will stick to the brand,” Goldstuck says.

He explains that at the top end of the market, the iPhone has strong market share in SA, but it has been significantly eroded first by the Samsung flagship phones, and more recently by the Huawei high-end phones.

“The entry-level iPhones are also hugely popular, but have relatively low market share, since they tend to be unaffordable in their core youth target market,” he notes.

“The Apple halo effect still persuades many consumers that once they are in the Apple ecosystem, they need to go in boots and all. In other words, they assume it is essential to have an iPhone if one also has a Mac and an iPad.

“This is no longer true, due to the compatibility of individual apps across ecosystems, but the perception remains. That said, the phones themselves now compete almost feature-for-feature with the flagship phones from Samsung and Huawei, which had previously been well ahead of the iPhones in terms of technology,” says Goldstuck.

According to Ryan Smit, managing director of local market research firm BMIT, Apple has remained relatively niche in SA even though it has gained market share in the past 12 months.

“I would expect that some South Africans who have previously been Apple users will respond to the price cuts announced by Apple on the new models by evaluating deals on offer locally and electing to move back to iPhone, particularly those who are already participating in the Apple ecosystem.

“Around this time last year, Apple gained a few percentage points in market share when the iPhone X models were launched, and it certainly has the opportunity to increase market share again with the introduction of the iPhone 11.”

Apple announced its Apple Watch Series 5, debuting an always-on retina display.
Apple announced its Apple Watch Series 5, debuting an always-on retina display.

Trade tension advantage

Smit adds the iPhone is the third most popular smartphone brand after Samsung and Huawei in SA, with around 15% market share in the smartphone segment overall, but around 40% market share in households with more than R30 000 household income, according to BMIT’s Digital Consumer Survey.

He points out that as many consumers still have concerns regarding Huawei’s ongoing relationship with Google, given the trade tensions between the US and China, it is likely Apple will increase its market share both locally and globally, primarily at Huawei’s expense.

“Apple’s most significant improvements to the new models are in respect to their cameras, which now offer dual-cameras on the iPhone 11 models, triple-cameras on the iPhone 11 Pro models, as well as night mode which enhances low-light photography.”

Historically, Smit notes, Apple has always had the best cameras on its phones, but in recent years, competition from other vendors has become fierce, so this is a welcome area of improvement for those who buy the iPhone for its photographic credentials.

“Apple’s price reductions could be a factor as Samsung and Huawei, as major Android brands, have stolen the limelight from Apple in recent years with respect to feature innovation. Some current iPhone users who have deferred upgrading for more than two years will be encouraged by the lower prices to upgrade sooner – provided these reductions are reflected in South African offerings.”

Smit points out that Apple has also given one-year free Apple TV+ to those who buy new Apple products, which could be an additional driver of adoption for both the hardware products and their new video-on-demand (VOD) service.

Nonetheless, Ofentse Dazela, director for pricing research at Africa Analysis, says other than the much improved camera quality, battery life and faster operating system, the new range iPhone notably looks very much similar to the previous generation iPhone devices.

“While Apple is an aspirational brand, with its patrons coming from the high LSM [living standards measure] segment in the local market, the downside with Apple’s latest offering is that these new devices lack 5G support. This may affect uptake, with most of its patrons ultimately deciding to wait for another range that will come with 5G support, possibly in 2020.”

Enter Apple TV+

Apple also introduced Apple TV+, which will be the cheapest television streaming service on the market yet. It will cost $4.99 (R73) per month when it launches on 1 November.

The VOD service will take on the likes of Netflix, Hulu and Amazon Prime, among other leading over-the-top (OTT) players.

Goldstuck says Apple TV+ is the most competitively priced of all the VOD services, and could clean up the market once it has a compelling enough range of content.

“For now, however, it is hard to see it competing on anything but price with Netflix, especially on originals. Most people won’t sacrifice range of original content for a few saved dollars. Over time, however, it will make for a spectacular price and content war.”

Smit notes that globally, analysts are reported as expecting as many as 100 million Apple TV+ subscribers within a short timeframe, and Apple has announced an attractive price point.

“The VOD market is becoming much more competitive in general, and Apple along with players like Netflix and Hulu will fight it out with studios/content owners like HBO and Disney, which will also have compelling value propositions with their own platforms.”

Smit explains Apple is also offering a very attractive price point relative to that of Netflix and even Disney+ which had already undercut Netflix.

“However, they [Apple] are likely to have significantly less content than Netflix and Disney, who already have extensive catalogues of their own content available, so consumers will still take that into consideration when deciding which service to get, and more importantly, keep.

“It is also not clear whether South Africa will be one of the 100 countries that will get Apple TV+ in November. However, as most of the content is new and thus unlikely to be licensed to current players in the SA market, it very well could be,” says Smit.

Content offerings

Dazela says VOD is very competitive in SA, and uptake is mostly influenced by the type of content offered by service providers.

“It is no surprise that the local content market has a high churn rate at the moment, as customers have really taken to hopping between service providers. However, here we have a vendor that is up against OTT service providers; perhaps the much admired Apple devices will provide needed stickiness that will help Apple to make headway in the content space.”

The company also unveiled its next-gen smartwatch, Apple Watch Series 5, which features a new display that allows the time and important information to remain visible at all times.

“Since the beginning, innovation has always been at the core of the Apple Watch,” Cook said. “Innovation really matters to people, from the life-changing to the potentially life-saving. Many of these technologies were barely imaginable just a few years ago. Apple Watch has become the most advanced and most loved smartwatch in the world.”

Apple also introduced the new seventh-generation iPad, bringing more screen area and support for the full-sized smart keyboard to its iPad.

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