Can Apple survive in World’s fastest growing Smart Phone market?

In 2015, India had surpassed the U.S. in its smart phone consumption and therefore, becoming the second fastest growing smart phone market in the world after China. Apple’s great interest in the Indian market is completely understandable however, getting a substantial chunk of Indian smart phone users has become a challenge for the American multinational. In 2016, Samsung sold 29 million handsets in the Indian market whereas Apple sold less than 10% of this figure. The deal breaker here lies in the fact that the South Korean electronics giant has understood the Indian market thus has introduced a huge variety of products with its starting range from Rs. 4000.

Can Apple survive in World's fastest growing smart phone market - Chakreview

Can Apple survive in World’s fastest growing smart phone market – Chakreview

iPhone: Still an aspiration for Indians

In case of Apple, most Indians wait for the California-based company to launch their new products, resulting in a decrease in the prices of their older iPhone versions and making them way  more affordable. The current popularity of iPhone 5s in the Indian market, especially when this model has phased out from a few global markets, proves how Indians prefer affordable technology instead of indulging in over expensive phones despite how much they aspire to buy them.

Apple’s continuous fight in India

Indian population has touched 1.3 billion people, with its maximum population in the age group of 20-35 years, therefore, becoming one of the biggest markets on Apple’s target list. However, there is an array of smart phone manufacturers that have reached the stores located in the cramped streets of tier 2 and tier 3 cities of India.

Oppo, Vivo, Gionee, LeECo, Xiaomi among other pushy Chinese brands have enticed both shopkeepers and customers, convincing them to buy “iPhone matched” features in almost 1/6 of an iPhone’s price. A mid-range model of iPhone 7 costs nearly Rs. 70,000, therefore, becoming a luxury for many Indian smart phone users. Soon after Apple announced the price of its new model in 2016, the social media users went berserk with many of them comparing buying an iPhone to a kidney’s price. However, Apple noticed a good market for its second-hand models in the retail stores. To cater to the audience seeking used iPhones and tackling the competition by Chinese brands, Apple is eager to explore the deeper markets in India and launch more of its stores selling both new and used iPhones in India.

Tim Cook, the current CEO of Apple, on his first official trip to India, was asked by Hindu, the prominent English news daily, “Most of the billion people in India may not have heard about Apple. A few million would have heard and seen Apple products and only the minority few, who can afford it, would have actually used an Apple device. How would you as the CEO, explain what Apple is to this Indian audience?” Cook’s answer was highly disappointing and signals to Apple’s confusion over their stance in the Indian market. Cook in his unsatisfying answer said, “Apple is about making the best products, we only create products that enrich people’s lives and in doing that we change the world in a positive way.”

According to Counterpoint Reach, Apple has a target to sell more than 750 million devices by 2020 and as a result, they are in a hurry to acquire more customers in India.

 

Apple is finally Setting up Plant in India:

Owing to Prime Minister Narendra Modi’s ‘Make in India’ Campaign and Apple’s effort to decrease the cost of final model of iPhones in India (to capture more market), Apple has decided to manufacture iphones locally in India (Bengaluru), however, they had initially approached the Indian officials with a demanding list of concessions.

With many foreign brands establishing their manufacturing/assembly units in India, the government cannot afford to give preference to only one of them and agreeing to Apple’s concession demands would mean opening the similar dialogues with the other global brands such as LG, Samsung and Xiaomi.

What Apple should do?

At the end, to strengthen its base in Indian market and acquire a bigger share of its customer base (though it crossed 2 million mark (shipment) in 2016 for the very first time in India), Apple Inc. has to come up with a concrete plan to face the two market leaders in India, Samsung and Xiaomi, by reducing the cost of their final product (by omitting higher import duties). Bringing an increase in the their 2 percent market share would mean pushing more ‘affordable’ products as well as building channels to go deeper in the Indian market and drive resale of used iPhones. It has to do what Cook had meant when he said Apple is just “scratching the surface” in India. Long Setting local plant may help, but it has still long way to go.

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