Apple sales rise in India but profits sink

Apple is now playing catch-up in India, at its own expense, against rival Samsung and domestic market leader Micromax and compete for a slice of the country's mobile device sales. Should it consider an India-only device?
Written by Nitin Puri, Contributor

Apple's profit in India shrank 33 percent, while sales rose by 51 percent for its 2013 fiscal year. The company's aggressive campaign against both Samsung and Micromax in a bid to catch up to the two competitors also is clearly costing it in the long term.

According to The Times of India, Apple's 2013 India profit dropped from 311.5 crore (US$604.66 million) to just 112.66 crore (US$18.25 million), while sales rose to 3,031.11 crore (US$491.07 million). In contrast, in 2012, revenues rose 223 percent to 2,003.9 crore (US$324.65 million) and net profit spiked 431 percent to 311.5 crore (US$50.47 million).

Furthermore, analysts earlier predicted Apple India would hit US$1 billion revenue, but later revised their forecast despite reports that supplies for the new iPhone 5s can't meet demand.

In addition to shrinking profit, for the period of July to August 2013, Apple's market share only rose 2 percent from 0.8 percent in the same period the year before. For that same time period, Samsung's market share rose 32.1 percent while Indian smartphone maker Micromax's rose 20.4 percent. Another one of India's leading handset makers, Karbonn, clocked a 9.9 percent rise in market share.

Apple India took a hit on its profits this year primarily due to the promotions it offered from January to March 2013, as part of efforts to increase shipments and sales of the lower-priced iPhone 4 over the premium iPhone 5. The company's long-term strategy to increase its Indian consumer base appears to focus on making its devices more affordable and urging consumers to access the Apple ecosystem, as few Apple users migrate to competitors. 

Personally, I think if Apple wants to really make gains in the Indian market, it should come up with a new device meant exclusively for the Indian market--priced more affordably, and preferably made in India, too.

Everyone knows how huge and lucrative the Indian mobile market is. If Apple delivers tailor-made devices specifically for this market, and at more affordable prices, I think this might be the best way to attract new users. Furthermore, existing Apple customers would also be inclined to continue using Apple products and help spread the word among family and friends.

That said, while Apple plans to discontinue the iPhone 4, it's still possible the iPhone 4S could be further reduced in price and positioned as an entry-level device in India. The only downfall I see in this plan is that existing iPhone 4 users would feel like they are carrying an entry-level product, when at the time of their purchase, it was in fact the best iPhone device available.

This is why I go back to my original proposal that there should be an Apple device designed specifically for India. It would be interesting to see how people in other regions and markets would respond, and if they would want this device as it wouldn't be sold elsewhere.

What is happening now is that since Apple devices are generally released later in India, consumers here typically go all out to get the latest device, usually counting on family and friends to bring one home with them from their visits to countries that carry the new products.

I know this routine all too well, as I've done it myself several times.

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