Why the 'C' in iPhone 5C Stands for 'China'

Wednesday Sep 4th 2013 by Mike Elgan
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And the “S” in iPhone 5S stands for “Sino.” Here’s how Apple is changing your iPhone to fix its broken China strategy.

Apple will almost certainly announce Tuesday two new phone lines, the iPhone 5C and 5S lines.

But the real event happens Wednesday, when Apple will announce the same phones in China (September 11 at Beijing's World Trade Center, of all dates and places).

This is the first such launch event for Apple in China. Why the big, splashy China launch? Why now?

For global handset makers, to succeed or fail in China is to succeed or fail worldwide. One-third of all smartphone sales are now made to Chinese consumers, an $80 billion market.

For comparison, Americans bought about 33 million smartphones in the second quarter of 2013. Chinese consumers bought roughly 88 million. By that reckoning, the Chinese market is more than twice as important for Apple as the US market.

Apple is failing in China. The company has dropped below 5% market share of the Chinese smartphone market, merely the 7th largest company in the market. (Compare that to Samsung’s 19% share.)

I believe Apple will roll out a 3-point marketing strategy in order to succeed in China. And two of them will affect iPhones for every customer in the world, including you if you’re an iPhone user.

Here’s Apple’s 3-point marketing strategy to fix its China problem:

1. Color

Apple is transforming its entire approach to color with its new iPhone lines and I believe the reason is to help the company succeed in China.

Credible rumors say the iPhone 5S line will come in gold, grey (or metal) and black. The iPhone 5C line will come in pink, blue, green, yellow and white. And not just any colors, but ultra bright, Easter-egg colors.

Colors are strongly associated with different things in different cultures. For example, in the United States black is associated with elegance and power and white with purity. These are good associations and why iPhones have always been black or white.

One of Apple’s struggles in China is that its color schemes don’t play well there.

Apple’s conundrum is that, unlike Samsung, it tries to minimize variation in its approach to aesthetics. While Samsung sells some phones exclusively to specific markets, including the Chinese market, Apple doesn’t do that. So changes that pander to Chinese sensibilities will affect all Apple products.

While Apple can, and will, offer a range of case colors, from black and white for the Western Markets, primarily, to brightly colored for the Chinese and Eastern markets, mostly, the operating system color sensibility must be one or the other.

So which is it?

Apple has chosen the Eastern scheme over the Western one with bright, pastel colors. Why? Because China is the more important market right now.

Beyond just dark and light, however, is the deeply ingrained symbolism of color.

A joint study by Cheskin, MSI-ITM and the CMCD Visual Symbols Library looked at preferred colors worldwide to see cultural and national differences in colors.

The survey highlighted the problem with Apple’s old handset-color strategy of offering only black or white.

From the report: “China is out of step with the rest of Asia and the world in that it rates white low in association with fresh and prestige. Like Koreans, the Chinese find white to be sad.”

Also: White is associated with death and funerals in Chinese culture and black and other dark colors are associated with misery and unhappiness.

Apple’s old color scheme offered only sadness and misery to the Chinese public, a losing strategy.

The study found that all nations including China have one color preference in common: Every nation loves the color blue. It’s the most popular color among colors offered in the study in most countries, including in China where 37% of survey respondents say blue is their “favorite color.”

The survey also found that blue is associated in China primarily with power, unlike in English-speaking countries and Japan, where it’s rarely associated with power and often associated with sadness.

Purple is associated with status and prestige just about everywhere in the world except in China, according to the report. For example, roughly half of survey respondents in English-speaking countries, Japan and Korea associate purple with prestige, while only 12% of Chinese respondents made that association.

That’s why I believe the iPhone 5C will come in blue but not purple. One symbolizes power with Chinese consumers and the other doesn’t.

The iPhone 5C will also come in green, a color associated worldwide with environmentalism and nature, and nowhere more so than in China, where 98% make that association.

Unfortunately, the study didn’t include gold or pink as color options. This is unfortunate for this article because the gold and pink iPhone options are the most interesting from a Chinese market perspective.

In Chinese culture, gold symbolizes wealth, happiness and good luck. And that’s why the iPhone 5S will now come in gold. I’m predicting that gold will be by far the most popular color option in China.

Considering only Western markets, it’s unlikely that Apple would have ever considered a gold phone. But the color makes a lot of sense in China and the color will also play well in India.

Where Apple is failing miserably in China, Samsung is succeeding. One way they’re doing that is by satisfying Chinese demand for phones as status symbols. For example, Samsung sells a $2,000 China-only flip phone, which they market with actor Jackie Chan. The phone is black with gold highlights all over.

Gold and red are very popular colors at Chinese weddings because of their associations in Chinese culture for wealth, happiness and good fortune. It’s hard to imagine Apple selling a red phone. But yellow and pink are often substituted for gold and red and are viewed as associated variants. That’s one reason why the iPhone 5C will also come in yellow and pink -- the budget versions of gold and red.

Another reason for pink is to satisfy demand in China and elsewhere in Asia for phones aimed at girls and women.

Asian companies have been selling pink mobile phones for years, but almost exclusively into Asian markets. Western blogs often catch wind of this branding and rake it over the coals as sexist and demeaning to women.

That’s the cultural conflict that Apple is stepping into. It wants to launch a pink phone aimed at female consumers in China and elsewhere in Asia to boost market share and help it compete with the companies that do market pink phones expressly to female consumers, but doesn’t want to be slammed as sexist as those other companies have been.

The solution for Apple is to release the iPhone in five colors, with one of them being pink and none of them explicitly targeted along gender lines. I’m predicting that pink will be one of the top two most popular colors for iPhone 5Cs in China.

Of course, these traditional associations can be taken only so far -- young people in China are like young people everywhere -- they like the colors they like and use colors and other symbolic attributes to express their individuality -- their differences from cultural norms.

2. Status and Cost

While smartphone buyers worldwide tend to fall into “status symbol” or “low-cost” camps when choosing a phone, these distinctions are especially sharp in China. Consumers there tend to want either an outrageously expensive phone (or a phone that looks like an expensive phone), or they want an outrageously cheap phone.

That $2,000 Jackie Chan phone I mentioned is an example of a high-status phone that costs a lot and serves as a status symbol for the owner.

When Chinese consumers want a cheap phone, however, they want a really cheap phone. Nearly half of China’s 720 million mobile phone buyers even today buy feature phones. Another huge percentage opt for super cheap smartphones in the sub $100 range.

Apple’s niche in the market won’t allow the company to sell $2,000 or $100 phones. But splitting the iPhone line into “status” and “budget” lines makes a lot more sense for the Chinese market than it does elsewhere, and that’s why I believe Apple is doing it.

3. China Mobile

I’m predicting that Apple will announce at the Sept. 11 event in Beijing a carrier relationship with China Mobile, which Apple has been unsuccessfully negotiating for years. China Mobile is the world’s largest carrier with 740 million subscriber accounts and the only carrier in China that doesn’t carry Apple phones.

Apple’s China Mobile problems have been partly business-related (both parties want to control what’s installed on the phone, for example) and partly technical -- Apple’s electronics have been incompatible with China Mobile’s. But the new iPhone is expected to be compatible with China Mobile’s network.

Why Apple Should Be Tickled Pink with Its Golden Strategy

I’ve made a host of predictions in this column, but the biggest one is this: Apple will succeed with this strategy.

While critics will slam Apple for making only cosmetic changes to its iPhone line while Android phones push the boundaries of real innovation, everyone will be shocked to find Apple’s global marketshare numbers go way, way up.

And the reason is simple: Apple has redesigned its entire line of flagship products to appeal to Chinese consumers.

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