Apple finally wakes up to the India promise: Too little, too late?

Apple finally wakes up to the India promise: Too little, too late?

Summary: Opening up stores and bringing in a three-year-old phone may not be enough to make the company's prospects come alive in the country.

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TOPICS: Apple, Smartphones, India
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It's almost amazing that Apple hasn't taken its role in the fastest-growing smartphone market in the world seriously. Watching its efforts here is somewhat like watching the mayor of Amity in Steven Spielberg's Jaws dither over the decision to close the beaches despite all evidence of a rampaging shark around gobbling people up.

Apple is bringing a smaller version of its stores to India.

In this case, the rampaging shark is the Indian consumer who bought upwards of 44 million smartphones last year, which was at least three times the growth rate over the previous year. Apple should have been waving big hunks of bloody meat at these fish instead of making half-hearted token moves.

It's not that Apple can't make money here — it does quite well, at $500 million per year in revenues — but it pales in comparison to what it could actually bring in, considering it's such a well-respected brand in India. Instead, it is Samsung that is the heavy hitter here; the Korean behemoth ringed in $4.5 billion in the last year in India, and apparently at least half of it came from its phones.

iphone vs s4
Apple is far behind global rival Samsung in India.

Now, it seems as if the sleeping giant has woken up. According to this article, Apple has decided to open up close to 200 shops sized 400x600 square feet — by its distributors Redington and Ingram Micro — in popular locations in both the big cities as well as tier 2 towns such as Pune and Chandigarh, which are often chockfull of students and also house newly rich big spenders.

This is a big move, since the company basically had no presence in India, especially compared to Samsung's 1,000 smartphone cafes, not to mention the thousands of dealers that sell its products exclusively and plaster its brand over their shops.

As we speak, Apple ads are all over the radio and in newspapers, advertising a $92 buyback scheme for your existing smartphone, which will be adjusted towards a $280 iPad Mini. As I had written here, the company has also resurrected the iPhone 4 for Indians, a strategy that it pioneered in Indonesia.

Will this work? My gut instinct is no, at least not for now. For the hipsters, the iPhone 4 could be an option, where scoring style points is a priority. However, for the large majority of the population, including its youth, who are discerning consumers and will not pick up a product that is distinctly behind the times and woefully inadequate to compete with the dazzling Android line-ups that range from Nokia's latest inexpensive, rabbit-out-of-the-hat X series to the flying-off-shelves Moto G.

Perhaps product development for different markets is not so easy for Apple. It is either simply unable or unwilling to develop and market a cheaper phone with good enough specs to compete with its more nimble brethren.

So, no matter how many stores it ultimately opens up, unless it gives people something comparable to the best Androids being trotted out (in terms of style, functionality, and price — warning: Xiaomi hasn't even arrived here yet), it will find out that its brand isn't good enough to reel the big or small fish in.

Topics: Apple, Smartphones, India

Rajiv Rao

About Rajiv Rao

Rajiv is a journalist and filmmaker based out of New Delhi who is interested in how new technologies, innovation, and disruptive business forces are shaking things up in India.

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8 comments
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  • Apple cant price gouge

    Microsoft is letting 2 Indian device makers, Lava and Karbonn, license Windows Phone for free. Android is also free. No way India is going to pay for iPhones, since they can't afford to be priced gouged.
    Sean Foley
    • I simply don't want Apple to succeed in India

      when they have already created chaos around the world. If they succeed, in no time will all of my fellow mates start showing off their iPhones which look even uglier to me than my Lumia 520. I just hope MS releases WP8.1 quickly & it gets all of the wanted features & even some more, so that WP market share continues increasing here. Till that time, Android can kill iOS to whatever extent possible.
      Ronty1996
    • How about some more adult thinking?

      You don't think India is going to pay....

      The issue is whether Indians will pay, rather than India itself.

      Which means that there isn't one answer. There are 1.24 Billion answers.

      And while India's averaged per capita GDP is only ~$4000, and less in foreign currency terms (relevant to buying smart phones), it is extremely unevenly distributed.

      Yes, despite the many starving in India, there are many others who are wealthy. And a growing Middle class who are not poor.

      So I think that you'll find that there are plenty of Indians who care about quality and will pay for what they want. And it's clear from surveys that the iPhone IS the aspirational phone in India.

      Now you say that Microsoft is licensing Windows phone for free and that Android is also free.

      But users don't buy Widows Phone or Android or iOS. They buy a phone complete with the OS.

      Windows phone makers and Android phone makers will charge what they can in a market and if they haven't had any additional cost for the OS then that may help them keep the price down, if they need to. Though on Android it means that they lose control of other potential profits to Google, so Android costs them anyway.

      Whereas Apple has no additional cost for iOS on each extra phone so it too can set the price in India at whatever level it chooses.

      The difference is that Apple is able to cream off the top of the market and make almost all of the available profit because the people who care what they use, and are willing to pay, want iPhones.

      The only real challenge to Apple comes from the high end Samsung phones, which take the rest of the available profit, and are almost as expensive as iPhones.

      So i'm sure that Android and maybe Windows phone will end up with a bigger unit share than Apple in India. But I'm equally sure that Apple will end up with the lions share of the profits from those who can afford to pay for what they want.

      And of course, as the average wealth of Indians climbs, so does the number that buy Mercedes, Rolex and iPhone.

      Charging what the market will pay for a superior product is not price gouging. It's the reward for delivering what people want.
      Henry 3 Dogg
      • 1.24b answers?

        "Which means that there isn't one answer. There are 1.24 Billion answers."

        I thought there would be two answers: Yes or No. Just answered 1.24billion times.

        hades
        hades_2100@...
      • @Henry 3 Dogg

        For what it's worth, I live in India.

        "plenty of Indians who care about quality and will pay for what they want."
        Yes. And they are already rocking an iPhone here.

        "And it's clear from surveys that the iPhone IS the aspirational phone in India."
        No. It is aspirational because it is costlier and is not being used by lot many people. Dual sim variants, external memory card, bigger phones and color phones are truly aspirational. And please do not speak of 5c.

        "Apple will end up with the lions share of the profits from those who can afford to pay for what they want. "
        I really doubt it. Mostly because if you end up buying iPhone, you would probably end up buying original cases/covers/accessories. So difference in total cost for the phone will not work in Apple's favor.

        "Charging what the market will pay for a superior product is not price gouging. It's the reward for delivering what people want."
        Superior in terms of?
        Apps? Android owns the local apps market and not iOS
        Speed? High end Androids and WP may/may not match iOS speed but are no slouch; Again pricing will be a big factor
        Supported accessories? Android and Nokia has way more than that of iPhone here
        Coolness? Those who wanted this factor already has iPhone; Only a few more will get into the platform

        Main problem I perceive is the device cost. iPhone at the time of launch, started with the price of $900. No subsidy. And with interests of EMIs, middle class and all lower classes already said bye bye. Upper middle class, looks for value for money. When other high end phones costs $150 lower, most of them won't get it either. Upper class will not just keep on changing their phones. Come to think of it. Even many two wheelers are cheaper than this.

        Next problem will be size. But as per reports, next iphone will be a phablet. This will address this issue, if a sweet size and price point which starts from $750.
        spicycheeks
  • No, Apple iPhone is the most desired mobile phone in developing markets, ..

    ... including India: http://www.bloomberg.com/news/2014-03-13/apple-beats-samsung-as-favorite-brand-in-emerging-markets-even-though-they-can-t-afford-it.html

    Apple had significant gain YoY on this.
    DDERSSS
    • @DDERSSS

      YoY of iPhone in India is same as that of YoY of Nokia in US. Numbers might look impressive but nowhere near the competition.
      spicycheeks
  • PT Barnum said

    "There's a sucker born every minute." People who honestly believe that an iPhone makes you more cool, more stylish and a better quality person than people who don't just proves that Mr. Barnum was right.
    The Heretic