Apple Brings Back Old Phone for Emerging Markets

iPhone 4 2011

Apple (NASDAQ:AAPL) is reportedly restarting production of the iPhone 4 to sell to customers in the developing nations of Indonesia, India, and Brazil, according to the Economic Times. The company stopped production of the old iPhone after introducing the iPhone 5 models in the fall, with the intention of making the iPhone 4S its new entry-level smartphone.

Three Apple executives familiar with the situation told the Economic Times that Apple is restarting production of the iPhone 4 specifically for markets in Indonesia, India, and Brazil. The iPhone 4 has been Apple’s top-selling model in India because it’s the least expensive iPhone model. Apple has had a hard time breaking into emerging markets because its devices are so expensive, and wireless carriers in emerging markets don’t typically offer the device subsidies common in the U.S., so consumers in those countries have to be able to afford to purchase smartphones at full price.

Times sources said that Apple’s Chinese supplier, Foxconn, has resumed making the devices only for those three markets. This is the first time that Apple has restarted production on a phone that had previously been discontinued.

“It would now require some promotion from Apple and can potentially become one of our top-selling models like before,” said Sanjay Kaul, the leader of Apple’s iPhone team in India, to the Economic Times. The publication reports that Apple’s team in India lobbied hard to get Apple to continue making the iPhone 4 to sell in the country, as workers there believe offering the cheaper device is the only chance for Apple to compete with rival Samsung (SSNLF.PK) in the Indian market.

According to market research firm Canalys, India is the world’s third largest smartphone market, with 9 million units shipped in the second quarter of 2013. While Samsung holds approximately one-third of that market, Apple has only a 2 percent share.

As the smartphone market in developed nations becomes increasingly saturated, emerging markets remain one of the last areas of high-growth potential for smartphone makers. Apple has insisted on continuing its tradition of only making high-end electronics, which has left the company with a tiny market share in huge developing smartphone markets like China and India.

Previous reports have also said that Apple will offer a significant discount on the 8GB iPhone 4 in India to stimulate sales. While an earlier report from the Economic Times said that Apple would not resume production of the device but would instead collect its remaining iPhone 4 inventory and sell all the remaining devices on in Indian market, now it seems as though Apple has been convinced it’s worthwhile to keep making the older phone.

When the iPhone 5C was released, Apple CEO Tim Cook responded to criticism on the device’s high price by saying that Apple is “not in the junk business.” Rather than making a low-end phone specifically for emerging markets and thus diminishing the company’s reputation for only making the highest-quality electronics, it seems that Apple will continue producing older versions of its products to hone in on growth in emerging markets.

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