Apple Beats Samsung as Favorite Brand in Emerging Markets, Even Though They Can't Afford It

People want what they can't have. For many of those living in emerging markets, that's an iPhone.

Apple is the most desirable mobile-phone brand among inhabitants of emerging markets, according to a report from marketing firm Upstream and researcher Ovum. In the study conducted this year, Apple edged out Samsung Electronics, which was the leader in a separate survey by Upstream last year.

Samsung saw a slight decline in its share of developing-market consumers who favor its phones from 32 percent to 29 percent, according to Upstream. Apple's share jumped dramatically from 21 percent to where Samsung was last year.

The iPhone 5c, geared toward price-sensitive consumers including those in emerging markets, came out in September. As part of that effort, Apple has stepped up its marketing efforts in those countries, putting the company's name front and center.

While that may help elevate the brand, it hasn't necessarily translated into a spate of sales for the 5c. Most countries don't sell phones at a discount with carrier contracts like in the U.S., and at $549, the iPhone 5c is still too expensive for most of the developing world. Those who can afford it often just pay a little bit more for the premium 5s — available in gold, which Chinese status-seekers love.

Without creating a much cheaper iPhone, Apple will have trouble reaching consumers in emerging countries, according to Francis Sideco, an analyst at IHS. Call it the iPhone paradox.

The brand halo for Apple is a good thing, but it won't help the company overtake Samsung in sales, at least not immediately. The South Korean electronics giant is the world's largest maker of smartphones partly because it makes low-margin, cheap handsets in addition to Galaxy products. The bright side for Apple is that the new emerging middle classes may switch to iPhones when they can afford them, but industrialization takes time.

In the Upstream study this year, the question posed to the 4,504 consumers in Brazil, China, India, Nigeria and Vietnam was slightly different from last year, as was the emerging markets targeted. In last year's study, people in countries including Brazil, India and Saudi Arabia were asked specifically to disregard price. However, Upstream said the two surveys were analogous.

The chart above shows how perceptions about the top five aspirational brands in the developing world have changed since last year. The bottom three — all of which have products on display this week at the CeBIT technology conference in Hanover, Germany — are working on low-end phones aimed at emerging markets. Taiwan's HTC is slowly building up its brand. For Nokia and BlackBerry, the picture isn't as rosy.



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