Political Scandal Could Threaten iPad & Store Deal

December 26, 2013

A growing political scandal in Turkey threatens to involve the country’s prime minister, a key player in a program to purchase $4 billion worth of iPads for thousands of schools, which in turn was a major motive for Apple’s plans to open a retail store in the country early next year. Three ministers resigned Christmas night in the face of corruption allegations unrelated to Apple, and they called on prime minister Recep Tayyip Erdogan to also resign. If Erdogan does leave office, it could put the iPad deal in jeopardy, and leave the nearly-finished and high-profile Apple store with vastly fewer customers. It was Erdogan who visited Apple’s headquarters last year, reportedly to negotiate the purchase of 12 million iPads for the country’s schools. It’s believed that as part of the iPad purchase agreement, the company also agreed to open a retail store in Istanbul, despite the country’s minuscule market share for Apple products. CEO Tim Cook will reportedly fly to Turkey next February to finalize the iPad deal with Turkish officials. According to research by StatCounter, Apple’s desktop operating systems are used on just .86 percent of Turkey’s computers, the lowest among all current and potential retail store countries. The OS market share figure is significant, because it indicates how many potential store customers there are within a country. The United States has a 13.7 percent OS share, while Switzerland leads the list of store countries with a 21.2 percent share.

According to StatCounter’s research, most European countries have a six percent share for Apple’s desktop OS, while most Asia countries report two to three percent market shares. Singapore stands out in Asia, however, with a 14.5 percent Apple OS market share.

Among the less likely countries for any Apple store, all rank higher than Turkey. Hungary and Poland have a six percent share, while Jordan and Greece have two percent shares. Argentina and South Korea have one percent shares of Apple’s OS.

Despite their large acceptance of technology, Taiwan and South Korea rank very low for Apple OS share. At the other end of the chart, Denmark, New Zealand and Norway have largely adopted Macs but have no Apple stores.

Besides Turkey, Apple also plans to open a store in Brazil, which ranks low for OS adoption.

The chart below shows the ranking of all 13 current Apple retail store countries (plus Hong Kong), and all the logical, potential countries for future stores. Six of the top 10 ranking countries already have retail stores. Understandably, just one of the bottom 22 countries has an Apple store (China). China ranks next-to-last on the chart, but its stores can be explained by the need for a physical and brand presence in a country with enormous revenue growth potential. With less than eight percent of China’s population, Turkey does not have that same revenue potential.

In the chart the blue bars indicate existing store countries, and the red bars indicate potential store countries. Click on the chart for a larger view.

 

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{ 8 comments… read them below or add one }

Ted T. December 26, 2013 at 0755

Thank you for this article — I was just reading about Turkish scandal yesterday and was wondering how it would affect Apple.

That said, Turkey has a population of 75 million and a higher per capita GDP than some countries in the EU. Current market share or the deal not going through matter little — they are absolutely a place where Apple should open a store. The potential market for Apple is huge, and opening a store is the best way to prime the pump. Not to mention the fact that Istanbul is a major tourist destination and that trade alone will keep the Apple Store busy.

Apple’s global problem right now are too few Apple stores. They should be in every EU country (currently they are not), they should hugely expend in China, and they need to at least have a couple of stores in India and Viet Nam.

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Gary December 26, 2013 at 1303

Thanks—your mention of tourism is spot-on. Apple really likes store locations where people from different countries are passing by. There’s probably no better example of that than Istanbul.

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Howard December 27, 2013 at 0739

We took a Seniortours.ca tour inTurkey, which attracts over 75 million tourists per annum, all of whom land in Istanbul.
Apple could run an English language store there plus several Turkish language stores plus in Ankara and later in other cities.
The Turkish language is the key to market share, as it is the missing link in Apple’s presence there.
Erdogan is forward thinking but overly dictatorial and has imposed religion on a state founded by Kemal Ataturk who fought the British at Gallipoli, and created modern Turkey. Erdogan has already spent tons of cash on the undersea tunnel and wants to build a big canal which would cost even more. Turkey’s cash supply is threatened by his big plans.

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min December 26, 2013 at 1145

So, we’re writing an article about iPads but make reference to the low number of Apples’s Mac OS to make it appear that they are the same thing. What I want to know is if the scandal is related to this deal. Was there money paid to the politicians? Probably not. So what if Apple agreed to open a store there in return for a purchase agreement. It’s done in every country. FYI, Istanbul is a bustling metropolis, a prime location for an Apple store.

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Gary December 26, 2013 at 1302

The scandal involves the sons of the ministers who resigned, and is related to real estate. The iPad deal itself hasn’t been mentioned. And the OS market share is just an overall indication of Apple’s presence in the country, which is what would affect the retail store. Actually, Apple has a strong 62.3% tablet OS market share in Turkey, but that’s probably skewed enormously by the relatively low number of tablets in the country.

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James Greene December 26, 2013 at 1522

I am absolutely certain Google, Samsung, Microsoft and others are vying for marketshare in Turkey. But Apple is the ONLY company that MIGHT be impacted by the political scandal.

Across the board from NYT to WP to Barrons to Reuters to WSJ to Seeking Alpha to Business Insider to CNET to CNBC to CNN only Apple is impacted by world events.

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Marktrek January 4, 2014 at 1527

Is it really easier for Apple to open in smaller towns than open in a major city in a new country? Spain has ten stores including Marabella, but not Vienna, Austria, Copenhagen, Denmark or Brussels, Belgium? Apple has had a presence in Ireland for years, but no store in Dublin while there is one in Belfast. I did not see Ireland on the users map. Are the user numbers really low and that is why Apple hasn’t gone retail there? Singapore has been Apple’s base in Asia but no store. Not even any rumors. Advertising in a country with multiple stores has to easier than supporting a small number of stores, but Apple is still the strange outsider in many parts of the World. My in-laws are in Indonesia. They have no idea why I use Apple.

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Ted T. January 5, 2014 at 0400

I agree, as. I said in my comment above. Opening more international stories, particularly in countries where they have no stores, plus China, where they are wildly inadequate vis a vis the size of their customer base, should be a much higher priority for Apple than it seems to have been so far.

You are 100% correct: how can they have no stores in Viena, Copenhagen or Brussels — indeed in every EU capital?

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