Price barrier is slowly lowered for Apple in SA
Conventional wisdom has it that the Apple iPhone is too expensive for South Africa. As a result, while it is the bestselling phone in the US , it lags far behind Samsung and Huawei in South Africa.
That is beginning to change, as the local distributor explores business models and sales strategies that make the brand accessible to more than just the top end of the market. The Core Group, sole distributor for Apple in sub-Saharan Africa, has leveraged both its iStore retail chain and relationships with major banks to create a South African approach to iPhone sales.
“The entry level is as important to me as the latest flagship,” says Chris Dodd, iStore CEO. “Last year, we realised we had to find ways to make the iPhone more affordable, either by finding entry-level products or finding new mechanisms.”
The new mechanism came in the shape of an iStore credit card, issued by Standard Bank, which allows customers to finance the purchase of an iPhone over 12 or 24 months at preferential interest rates.
Meanwhile, the entry-level products — not a phrase one usually finds in Apple marketing — came in the form of CPO iPhones. That’s not a new phone model, but a new business model. It stands for “certified pre-owned”, and represents old used iPhones that have gone back to the factory and been refurbished. They look and feel new, and come with a 12-month guarantee.
“This is how we’ve successfully appealed to a broader range of customer, with an entry level at R3 999, all the way up to the iPhone X 256GB at over R20 000.”
Startlingly, the expensive new phones released late last year, the iPhone X, 8 and 8 Plus, have seen strong demand from both cash and contract customers. They’ve received a boost from another mechanism negotiated with a bank, namely a subsidised contract offered by FNB to its own clients.
The success of the iPhone is important beyond only smartphone market share. In South Africa, it makes objects of desire of the rest of the Apple range. It is no coincidence, then, that Core has just seen its biggest quarter yet for the Mac range of computers, with Januaryto-March sales beating last year’s October-to-December numbers — the previous record for this market.
Even the fading iPad, which saw the local market tracking global downward trends in tablet sales, is back to growth, says Dodd.
It’s been helped along by the launch, two weeks ago, of the sixth-generation iPad, specifically geared to the educational market. It supports the Apple Pencil, a stylus that previously was only compatible with the top-of-the-range iPad Pro. Unlike the long delay before new iPhones arrive in South Africa, the new iPad arrived here the week after its unveiling in the US.
Traditionally, as soon as a new iPad generation arrives, the previous edition falls significantly in price. The fifth generation is now selling at less than R4 000, bringing its price down to the level of the first iPads to arrive in South Africa in 2011.
Apple devices remain luxury products, but the level at which luxury can be afforded is slowly being redefined.
‘We realised we had to find ways to make the iPhone more affordable’