1. In 2013, Apple introduced the iPhone 5c to attract consumers who were not willing or able to pay a premium for an Apple device. The price was about $100 less than the top-of-the-line 5s. Was this the right pricing decision?
2. Do you think Apple can continue to grow by developing breakthrough products that create new markets, as it did with the iPod, iPhone, and iPad?

3. How has Samsung’s global marketing strategy enabled it to compete so effectively against Apple?
4. Assess the prospects for the global success of Apple Pay and the Apple Watch.

When Steve Jobs died in October 2011, the world lost one of the towering figures of the modern business era. Apple, the company Jobs cofounded, was a pioneer in the consumer electronics world; key product introductions included the Apple II (1977), the Macintosh (1984), the iPod and iTunes (2001), the Apple Store (2001), the iPhone (2007), and the iPad (2009). At the time of Jobs’s death, Apple was the most valuable tech company in the world. By September 2012, Apple stock had soared to record levels, briefly rising above $700 per share. In addition, Apple had amassed more than $100 billion in cash, most of it held abroad as foreign earnings. Meanwhile, once-dominant tech industry giants such as Nokia, Sony, Dell, and BlackBerry were struggling.

Despite strong 2012 sales for the iPhone 5, however, industry observers began to wonder whether Apple’s hot streak of hit product introductions was starting to cool. Apple’s reputation was based on its proven ability to disrupt existing markets (e.g., the music and telecommunications industries) and create new markets with technical and design innovations. However, some viewed the 2012 launch of the iPhone 5 as an evolutionary step rather than a revolutionary breakthrough. In fact, many consumers opted to buy the slower, cheaper iPhone 4 or 4S rather than upgrade to the iPhone 5. Without Jobs, considered by many to be the heart and soul of the company, were Apple’s best days behind it?

The Competitive Threat
As growth in the key smartphone sector began to slow, Apple’s most formidable competitor was Samsung Electronics, a division of Korean industrial giant Samsung Group, whose products range from semiconductors to household appliances to smartphones. Samsung’s popular Galaxy series of phones are powered by Android, an operating system developed by Google. Some Galaxy models, including the Galaxy Note (also known as a “phablet”), have larger screens than the iPhone, a point of difference that has helped drive sales. The rivalry has been heated, with the two sides squaring off in court over alleged patent infringement.
China and Europe are two of Samsung’s key markets; in 2012, Samsung launched the Galaxy S III in Europe. In 2013, Samsung staged a lavish event at Radio City Music Hall in New York to launch the Galaxy S4. Why the change? As J. K. Shin, the executive in charge of Samsung’s mobile business, noted, “We’re a global player in the smartphone market and a global company, and the U.S. is an important market for us . . . I’m not satisfied with our U.S. market share.” In many developing countries, there is strong demand for inexpensive mobile phones. Some Android-based models from Samsung and other companies sell for much less than the iPhone 5. For many years, Apple did not offer a lower-cost version of the iPhone. In the United States, wireless carriers such as Verizon and AT&T usually subsidize the price of the iPhone for consumers who sign a multiyear service contract. That’s why an American iPhone 5 sells for $199. By contrast, in other countries consumers pay the full, unsubsidized price of the iPhone but are not tied to a contract. Moreover, the iPhone 5 was the same in every world market. By contrast, Samsung makes several versions of the Galaxy S4—using different processors, for example— to suit the needs of different regions.
Not surprisingly, smartphone makers are setting their sights on China, India, and other emerging markets. For example, Greater China, which includes China, Hong Kong, and Taiwan, is now Apple’s second-largest market. While Apple currently commands almost a 50 percent share of the market for phones selling for $480 and up, CEO Tim Cook is not satisfied. Distribution is critical, and Cook is aggressively expanding the number of outlets in China that sell iPhones. In 2013, Cook announced that China Mobile, the largest carrier in the region and the world’s largest carrier overall, would begin selling the iPhone.