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Qualcomm is looking to ban iPhones from being imported into the US following a feud with Apple. Source: Shutterstock

Jakarta selected as Apple’s first R&D center in Southeast Asia

APPLE has focused efforts on wooing Southeast Asia starting with the opening of an R&D center in Jakarta.

As reported by Tech in Asia, Apple has plans to rent office space on the city outskirts, in a satellite town developed by Indonesian conglomerate Sinar Mars. The new center, which should be operational in a few months, will create jobs for 300 to 400 locals while a second Indonesia-based lab – in Sumatra – is likely on its way.

Apple has apparently set aside US$44 million to launch these labs, and the endeavor is the company’s way of complying with rules that require foreign smartphone makers to invest in the country before selling its products.

SEE ALSO: Apple to open two more R&D centers in China, invests over $507m

It certainly needs to pick up the slack in Southeast Asia, as brands such as Samsung and Oppo are dominating the region according to a 2016 IDC phone sales report for Asia. While Samsung takes 20 percent of the market, Apple didn’t even make the top five – this has a lot to do with its premium pricing, which is deemed too expensive for local users.

“Competitive price points and heavy marketing activities in a now crowded market are the key driving factors for the budget-conscious Southeast Asian market. Smartphones priced at under US$150 make up for 68 per cent of total smartphone shipments in the second quarter of 2016,” said Jensen Ooi, a market analyst with IDC Asia-Pacific’s Client Devices Research division.

Samsung as the leader in a price-sensitive market makes sense, but Oppo is certainly the dark horse in the race for Southeast Asia – taking the number two spot in IDC’s rankings. The Chinese smartphone maker rose from a small brand to one of the world’s largest – reaching a sales increase of 136 per cent year-on-year.

In the past, Apple has always been a brand synonymous with high-end products for the upmarket demographic, but recent shifts in its pricing strategy shows it may be considering lowering its prices to get more users. It recently announced a low-cost 9.7 inch iPad, and the Apple Watch was considered one of the most affordable wearables on the market.

Although Apple was a pioneer in smartphone innovation, the reality is it is no longer the leader today as there are too many high-quality, low-cost phones flooding the market. It will have to deploy new strategies to bring new users into the Apple ecosystem and releasing more affordable products might be a good start.