iPod Overseas Report: Kuala Lumpur, Malaysia

Read Parts I, II, and IV: iPod Overseas Report: Tokyo, iPod Overseas Report: Singapore, and Backstage:// Asian Gadgetry and the Future of iPod.

A report on the presence of iPods in Malaysia’s capital city of Kuala Lumpur could conclude in a single paragraph: unlike Tokyo, Japan and Singapore, the subjects of our last two reports, iPods are quite nearly invisible in this city of 1.5 million people. The most likely reason: surprisingly high prices in a country that, while rapidly modernizing, is still far below the economic levels of its most prosperous neighbors. So should you bother reading on? We think that the answer is yes, if only because there are some interesting details here nonetheless.

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On December 24, 2005, the temperature in Kuala Lumpur peaked at around 88 degrees – a tropical quantum of warmth that precludes any local “winter wonderland” or “white Christmas.” But as the saying goes, “it’s not the heat, it’s the humidity.” With 58% humidity and 70% cloud cover – common here in monsoon season – the air feels thick and wet, and the constant moistness of your skin draws your attention from the fact that light still pokes through the gray skies.

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When you look up, however, you see all the evidence of what the travel guides invariably call “an Asian tiger that roars,” with architectural symbols of “astounding growth… over the last two decades” – a city filled with proud, decent people. Multi-ethnic and multi-religious but predominantly indigenous Muslim, the population has seen its city evolve from humble roots in tin mining into one of Southeast Asia’s leading high-tech capitals. Monorails above the streets link to commuter metro trains and distance rails to move people to jobs and tourist destinations, and like their equivalents in Japan and Singapore, public transport here is clean and generally orderly. Signs implore you to beware of pickpockets, but otherwise, the transit lines are efficient and safe.

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What you don’t notice on any of these public transports are throngs of people with earbuds. In fact, the compartments and stations are relatively quiet, yet from corner to corner of each, you’ll notice that most of the ears are empty, even people who are traveling alone. Once in a while, you’ll see kids play with Game Boy Advance SPs. And some people fidget with cellular phones – mostly Nokias and Samsungs. More on that in a moment.

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But there are comparatively few people using portable music players. On the most packed train we’ve been on during our travels in Kuala Lumpur, we counted a record four people wearing headphones, mostly lanyard-style ones, and none of them iPod white. Across several days of travel and exploration, we counted literally three total iPods amidst the hundreds of people we’ve seen, two of them clearly owned by foreigners.

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To make the point again, this contrasts markedly with what we’ve seen in our travels in the United States, Europe, and elsewhere in Asia, where hard disk-based iPods from the 3G, 4G and mini generations are far more commonly seen than shuffles or nanos. In Malaysia, we’ve seen flash-based iRivers, a Creative Zen Micro, something from Philips, and a couple of off-brand players, nearly all of which either hung from the wearer’s neck or used a neck-level remote control with the player in his or her pocket. One teenager carried a small CD-based boombox – thankfully turned off – onto a train.

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Stores here somewhat, but not entirely mirror what we’ve seen on the streets. Creative Labs and Sony have a very significant presence in all of the places we’ve visited – a list that includes “Asia’s largest shopping centre,” the Mid-Valley Megamall, numerous malls and shops around Kuala Lumpur’s Golden Triangle, including Berjaya Times Square, Imbi Plaza, Low Yat Plaza, Suria KLCC and Sungei Wang Plaza, Chinatown, and elsewhere in the city.

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Given the strength of these competing products’ retail presence, the most interesting thing is how few of the devices people actually appear to be buying and using. Sony’s Network Walkman and Walkman Bean are in dozens of stores, for example, but no one seems to care about them. This, despite Sony’s official advertisements claiming that its 20GB Network Walkman is the #1 “hit model” in Japan (closeup above, and same for smaller Walkman in preceding photo at right); we suppose this funny claim was easier than Sony’s old tactic, namely inventing a fake critic to say how great its products are.

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Creative Technology has similarly done a very good job of getting its products into places where people are. In addition to company-sponsored stores such as this one, there are many, many Creative-branded flash and hard disk players in shops. Even at retailers that also carry the iPod, both displays and clerks seem to be focused on Creative products first, with iPods playing at best a secondary role. This isn’t because most comparable Creative products are cheaper, but rather because certain models – especially the low-end ones – are.

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iPods, by comparison, seem to require a bit more effort to locate. In many major stores we’ve seen, the iPod isn’t available at all, but CD players and inexpensive competing MP3 players are. There aren’t any Apple Stores here, and they’re nowhere near as common a fixture at smaller vendors as they were in, say, Singapore. In fact, smaller vendors have very little to do with the iPod here.

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This isn’t to say that the iPod is entirely missing in action in Kuala Lumpur – if you want one, you can go a little out of your way to find them locally (such as by looking online for approved retailers), though availability at even these stores is somewhat of a question mark. At major electronics stores such as Best Denki (above), current and discontinued iPods were being advertised, yet were limited in availability – one store was “sold out” of 5G iPods, but had color-screened 4Gs, while the other was out of shuffles and 4GB nanos, but had 5G iPods and older iPod minis in two colors.

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In fact, a surprising number of stores – including authorized Apple resellers – had color 4G iPods and minis in stock, and posters for these discontinued models, while newer iPods were spotty. Before you get too excited about the “sold out” phrase and this spotty availability, it’s important to note that the total amount of space the big stores devote to iPods is small, so having models out of stock may not be quite as good a sign as one might initially assume.

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The most impressive display of iPod hardware we saw was at a shop called iPod Station in the Golden Triangle shopping area. Apparently an Apple-authorized store – with iPod in its name, no less – the Station was one of the only retailers we saw with a significant number of accessories for sale. Most shops carried only iPod hardware, while a few others had cases, official Apple accessories, and Altec Lansing iM7s, and a few more had cases, Apple accessories, iM7s, and a few other options (such as iPALs and car chargers).

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As in Singapore, the local Apple dealers here – including official Apple Centres – carry a mix of legit and knock-off stuff. We’ve seen yet another clone of Apple’s iPod nano Armband here, this time from a company called Et-cetera, and plenty of i-Steroid speakers, plus cases from some of Asia’s least reputable vendors. Belkin is better represented here than most U.S. companies, though even its products are relatively few in number; accessories from Griffin, XtremeMac, and DLO are essentially non-existant locally.

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All of this leads to a three-stage chicken-and-egg question: would it be worth Apple’s while to flood Malaysia with more iPods and accessories, given that some people here seem to be using competing digital media players, but more often no such devices at all? Put another way, is there a place for the iPod in a country where earbuds aren’t yet popular? In our view, the answer is yes, but perhaps in two different ways than in other countries we’ve visited.

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Clearly, this isn’t a technophobic population. Malaysia not only specializes in the manufacture and export of high-tech electronic products, but it consumes them – here, predominantly mobile phones and computers. In fact, the mobile phone industry here – particularly its massive distribution network, which has an incredible street and mall presence – is staggering.

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Some of the malls here have literally multiple tens of phone shops, many official resellers, and they’re loaded with Nokia, Sony, Samsung, and yes, Motorola phones. As in Singapore, these shops are already selling Motorola’s latest SLVR and PEBL phones, which carriers haven’t yet released in the United States. Since people in Malaysia clearly like their mobile phones, and these phones are so widely available and marketed, this may be the best possible place to sell an inexpensive iTunes phone to build iPod awareness. (We don’t think that this is as viable a strategy in other countries, but here, it makes sense.) Past ROKR debacle aside, there is unquestionably some value in using Motorola’s existing vendor channels over here – at least, for the right product.

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The real problem for an iPod (qua iPod) in Kuala Lumpur appears to be price. iPods are sold here at markups of 30-40% over their US numbers, which means that a 512MB iPod shuffle sells for the equivalent of $128, and 60GB iPods for $555. Even discontinued models sell for prices higher than their original US prices, and discounts on current models are rare: local Apple Centres offer no discounts on hardware, but a $15 credit towards a same-day accessory purchase, or 10% discount on AppleCare; other dealers offer the equivalent of $6 off the price of a 2GB iPod nano.

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Now consider that the average annual salary in Malaysia is under $5000 – 1/9 that of the United States, 1/8 that of Japan, and 1/5 that of Singapore. This single difference hugely explains the popularity of low-end players here, and why you don’t see Sony’s hard disk-based Network Walkman all over the place in Kuala Lumpur, either; most stores other than Sony’s own locations don’t even carry it. Many of the flash-based devices here sell for $200 or less, which is far more within reach of the population. Yes, the country is modernizing and filled with impressive architecture, but average people don’t live in these towers, and their incomes can’t easily afford iPods.

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Apple, or at least its local affiliates, seem to grasp this – sort of. Local radio personality Rudy from Hitz.fm is fronting an aspirational “All I Want for Christmas is an iPod” campaign, which seems to be the only (but not insignificant) local advertising the iPod’s getting here. We’re not fans of the “save until you can afford the crazy high price” concept – price parity is better – but this may be the best that local resellers can do, at least for now. Plus, the iPod’s name is getting out there.

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An alternative would be to push more aggressively to popularize lower-cost flash-based devices here instead of (or in addition to) iTunes phones. Lower-capacity iPod nanos and a new iPod shuffle/replacement would be the easy way to do this. It’s obvious that size and wearability are major considerations in this country, and Apple has these bases covered as well as anyone; the problem’s mostly pricing. That, we think, is the reason we’ve see people wearing lanyard MP3 players here, but they’re neither shuffles nor nanos.

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One ancillary issue is content. It’s been obvious in our travels that people here love music – with our earbuds in, we’ve been stopped randomly, quizzed on our music tastes, and given suggestions by locals. (Thanks to the Petronas Towers crew for the Too Phat recommendation; we picked up two disc sets and are listening right now.) But piracy appears to be a fairly serious issue here. A radio announcement we heard implored people to actually pay for CDs – especially for Malaysian artists – rather than swap files or buy copies at the numerous disc duplicating shops found in local malls. Even DVDs of past and current movies can be had for $2 each at these shops, making the $10 prices of CDs and $15-20 prices of DVDs a comparative challenge for consumers here. There’s no iTunes Music Store in Malaysia, but even if there were, would people pay to download anything? Perhaps it doesn’t matter; there was a reason for the iPod before the iTunes Music Store.

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Of course, we don’t claim to have the answers, but it’s obvious that Malaysia presents an interesting set of challenges for Apple as it prepares for the next stage of the iPod’s growth. While we’re not seeing white earbuds on the subways, on the streets, or in shopping malls, we’re also not seeing so many black or silver ones that the right iPod (or iTunes phone) would have a problem sweeping this population. The biggest question in our minds is whether Apple wants to see that happen, and is willing to do what’s necessary to see that it does.

We hope you enjoyed this look at the iPod in Malaysia. Our previous iPod Overseas Reports on Tokyo, Japan and Singapore are still online. Want to contribute a report from your city? E-mail jeremy (at) iLounge.com. Otherwise, we will look forward to your comments.