While Apple focuses on China, everyone forgot about India

While Apple focuses on China, everyone forgot about India

Summary: Apple's iPhone sales has grown by as much as 400 percent in just three months in India, but the Cupertino, Calif.-based company has already made clear that it won't make any compromises on a 'low-cost' smartphone.

TOPICS: India, iPhone

India may be the world's second largest country by population with 1.21 billion residents, but China has been Apple's main focus in recent times, as the world's largest countries, thanks to its booming economic growth.

But in the last few months, Apple has seen between a 300-400 percent rise in iPhones sales in India, according to a report by The Economic Times. That may be where the company's next cash cow lies, but the company has taken a back-seat approach on the emerging market.

According to the report, the company is "in the middle of an extensive advertising and marketing campaign for its iPhone," which could be the start of a "sustained effort by Apple" in a bid to compete with Samsung in the region. In the process, Apple has reportedly increased its staff levels in the country by five-fold. 

It seems to contradict Apple chief executive Tim Cook's comments during the company's third-quarter earnings last year. In reply to an analyst who wanted to know why Apple was not as successful as it could be in the Indian market, Cook said that he "believe[s] Apple has some higher potential in the intermediate term in some other countries."

However, he did note that, "this doesn't mean we're not putting emphasis in India."

Apple's iPhone gain uptake in the Indian market, where Samsung rules the roost and dominates the market, has helped the company significantly, amid slowing growth in the U.S. and European markets. 

While the Cupertino, Calif.-based company has in recent years on the most part seemingly ignored India as one of the BRIC nations of economic developing superpowers—which includes Brazil, Russia, India and China—the iPhone maker has instead focusing on expanding its retail presence in mainland China

To expand its market share and to continue on the iPhone gravy train, Apple has to take one of the BRIC nations by storm, and while China is doing well—around 12-15 percent of Apple's total revenue, according to Q1 figures—India is catching up, and rapidly.

Recent latest comScore figures suggest that smartphone penetration rates in developed nations—notably the U.S. market—stands at more than 50 percent, or half the population. In India, the figure stands at just 10 percent.

But that massive growth in iPhone sales comes from a tiny proportion of the population—maybe one or two hundred million people. It sounds like a lot, but in a huge market of more than one billion residents, it's merely a drop in the ocean.

This poses a problem for Apple. It can either 'cheapen' the iPhone by manufacturing the device with lower specifications, or lower its profit margins on the device and sell the existing iPhone 4, 4S or 5 models—or some combination thereof—and therefore vastly reduce the device's retail price. 

Apple will more likely instead target that 10 percent of the Indian market aggressively, rather than reintroducing the iPhone 3G, or 3GS, into the developing market, which would pose a fragmentation risk to the wider iPhone market.

Market share grabbing is not a sprint, it's a marathon.

Topics: India, iPhone

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  • 10%

    And of that 10% how many can really afford a top end device? Let me answer that for you - not many. And India, like China; not exactly known for wanting to pay for software - or in this case apps.

    And I'm not saying getting into these developing countries (sorry, that's all they are and that might be overly kind) isn't a good thing; just don't expect them to move any needle any time soon.
    beau parisi
    • Re: 10%

      When there were services like Napster in the US, how many used it and how many actually paid for the songs? Apple owners have no choice but to pay because they are in iPrison already and by choice! True, there is likely a higher percentage in "developing" countries that do not pay for software, but, like physical textbooks, there needs to be a different model, not just translating the price!

      And no need to be sorry for calling "developing" countries in that way; I also call the US a "technologically developed" country, rather than simply "developed" because intellectually ... well, you teach creationism in science class!
  • They all focus on lowest cost,

    and they forget about the countries that give them their corporate welfare and other entitlements, and their profit margins will eventually dry up as fewer have money to spend. A supply-side economy ignores the demand-side, and as wages continue to stagnate or drop...

    And with known reports of malware integrated into hardware chips, piracy, giving source code to these countries who then seem to use it in their hacking the rest of the world...

    Apple can offshore everything and then find every means to blame everyone in the US. While it collects all the corporate welfare and while its lobbyists rewrite our country right out of being a democratic republic... along with the rest.
  • Apple's share in India is still supertiny (as well as Brazil)

    Apple has slightly bigger than tiny marketshare in Russia, but overall Apple's smartphones cost too much for the second/third world countries.

    But while Schiller denied any intentions or interest in cheap iPhone, that interview was later corrected to point out that he does not deny possible "inexpensive" iPhone.

    This means that Apple might be indeed preparing cheaper iPhone -- though cheaper, but not cheap. Not $100-150 as some Samsung smartphones.
  • 3X - 4X of almost 0 is still almost 0.

    India is Apple's single weakest geo-location. I think China represents about 20X more revenue than India at the moment. I would have been impressed if the repost indicated Apple grew India by 1000% or 3000%. Growing by 300% (4X), ??? OK. Not impressed.
  • Apple should forget India.

    It is utterly stupid to compare the Indian mobile market with the rest of the world.

    1. Nobody offers subsidized phones.
    2. India has the cheapest phone plans in the world, at least for students.
    3. At Rs.46000 (~$850) for the cheapest iPhone, you have got to be kidding me. That is the average price of a laptop.
    4. When Nokia comes in with an attractive package like the Lumia 510, 610, 620 at around Rs.15000 (~$270) with decent software, why would the consumer try the iPhone.
    5. And the app market really doesn't cater to the services available in the country.

    Nokia has too big a lead in this country (a certified service center at every street corner). With Samsung selling a ton of Android phones at low prices, Apple will be certainly not be able to make any headway into the market. You also need to remember that the Indian government demands companies that set up shop in the country to manufacture it there or be taxed to hell. Good luck with this.
  • Same old story..

    When Apple had barely a fraction of sales in China, everybody said Apple were doomed if they didn't do a cheap phone tailored to Chinese tastes, that they wouldnt sell more than a few thousand units to the super rich(for China) few. What did Apple do? Nothing, they carried on as usual and waited for the Chinese middle classes to catch on to western tastes and spending habits. Now China is set to become the largest single market for Apple products.
    Now the pundits are opining exactly the same sentiments. Watch this space - Apple won't change a thing about their model, they don't have to.
  • Apple in India is tiny...

    ...and 300% growth on a market share of less than 1% is completely insignificant. The Economic Times may be one of India's largest newspapers, but it is well known for sensationalism. Indian Telco carriers do NOT subsidize handsets. How many iPhones do you think would have been sold even in USA if every single buyer had to pay $500-$600? And now imagine that situation in a market where customs duty is 50%, and average incomes are really low.

    Everything you read about the huge penetration of mobile telephones in India refers to ALL mobile phones, and not smartphones. The average price paid for a handset is Rs.5,000 ($100), whereas an iPhone would cost Rs.45,000 to Rs.60,000. That's the cost of a high-end laptop or a motorcycle!

    And that's why Samsung is rapidly overtaking Nokia, by launching a huge range of phones in the price range of under Rs.10,000. Apple has miles to go...