Apple makes a comeback in Africa with the halo effect of the iPod
Although Apple is an established niche brand of computers in the developed world, it has been almost invisible in Africa. Now you can spot Apple laptops in the hands of a number of ISP "movers and shakers" and of course the ubiquitous iPod has done much to raise the brand's profile. One sign of this growing presence has been the opening of an Apple Centre in Morocco's capital Rabat recently. This week Isabelle Gross talks to Apple's main African distributor, Jihad Bou Samra of Micro Conseil International.
With more than 20 million units sold worldwide in 2005, the iPod symbolises Apple's ability to recast itself. Few companies have been so successful at turning their businesses around through a single successful new product offering. About 40% of Apple's net sales in 2005 originated from the sale of iPods and other music related products and services. This represents around $5.5 billion, and there is no sign of demand abating. Although the company recognises that competition will intensify in the future as hardware, software and content providers increasingly work together to offer competing products, so far Apple has maintained its competitive advantage by more effectively integrating an entire solution including the iPod hardware, the iTunes software, and the distribution of third-party content via its iTunes music stores.
So far this business strategy has paid off, and enabled the company to capitalise on the convergence of digital consumer electronics and the computer. So, how does the company perform on the computer side, its core business? According to Jihad Bou Samra, Head of Sales at Micro Conseil International, the Independent Marketing company in charge of distributing Apple products and services in emerging markets, sales of Apple desktops and laptops have increased by around 30 to 50% in the last two years. He further explains that the increase of computer sales is linked to the success of the iPod which has generated a renewal of interest of customers towards all Apple/Mac products, and in particular, its computer range. This “halo effect”, as he calls it, has attracted new customers which are primarily looking for stability and quality. The “switchers” as he labelled them are customers that no longer wish to have to deal with viruses and bugs designed to cripple Microsoft-based systems.
Besides reliability, Apple’s computer range has always relied on innovative designs aimed at appealing to creative professional customers and the education sector alike. It is probably for this reason that the Apple stand attracted so much interest at the recent World Summit for the Information Society in Tunis. As Jihad Bou Samra explained, customers were interested by the design peripherals like the mouse, but were also seduced by the quality of the iMac’s screen. The magnetic quality of Apple's designs also provides the perfect opportunity to introduce potential customers to the company’s wide range of creative and educational software, comprising desktop publishing, video editing, wireless networking and student information system software.
Despite the obvious allure of Apple's quality and design, one of the main criticisms levelled at the company’s products has always been price. In this area too, explained Jihad Bou Samra, the firm has taken steps to be more competitive, and current Apple computer prices are now in line with those of mainstream manufacturers. If one compares equipment with similar characteristics from Apple and Dell for instance, the former is no longer so much pricier than the latter. The firm is also diversifying its product range to target the low end of the computer market. In January 2005 it introduced the Mac mini, a desktop personal computer with a starting price of $499, and in July it went on to update its Mac mini line-up by expanding it to three models and by increasing the memory to 512 MB. The Mac mini had a very positive impact on the market, explained Jihad Bou Samra, and as the eMac is exclusively sold to schools, the Mac mini has become the entry-level computer in the Apple computer range.
To maintain this double-digit growth in Africa, Apple relies on two independent marketing companies to shift its hardware and software, dividing the Continent between them. Micro Conseil International distributes Apple in North Africa, West Africa and some East African countries, while South Africa and the neighbouring countries like Namibia and Malawi for example are covered by CORE, a company based in South Africa. In each country, selected local resellers ensure the availability of Apple products and services. The size and the number of distribution channels vary according to the size of the market in question.
According to Jihad Bou Samra, finding the right distribution channel is not always easy, and also takes time. An Apple-appointed reseller in Africa has roughly the same obligations as a similar firm in Europe. The agent needs a team well-trained in Apple solutions, so as to ensure accurate advice and high quality customer support. The retailing of Apple products and services also requires specific IT knowledge, and a certain level of marketing input is also needed to promote the hardware and software. On the other hand, Apple provides the marketing material and training support via its website and corporate training program and has a hotline dedicated to resellers. For the moment, Apple’s African network appears relatively sparse when seen in the light of its retail strategy of rolling out stores across the USA and some European countries. But this is perhaps only to be expected, given that in 2005 supplies in its home country still accounted for 60% of its total net sales.
It is still questionable whether Apple’s flexible distribution structure and attractive product range will be sufficient to compete with Microsoft's efforts to push its products on the African market (the translation of its operating system into Swahili is one of many examples of Microsoft’s initiatives on the Continent). A new Apple product with a “halo effect” as great as the iPod’s would undoubtedly be welcome bonus in the next few years.