Apple unveils plan to capture Indian market

Having struggled to sell iPhones to Indian consumers who prefer cheap over expensive, Apple is hoping a new strategy can turn its fortunes in the world's second-biggest mobile market.

Apple, which has struggled to sell its iPhone device in India, is now hoping a new three-pillar strategy can change its fortunes in the world's second-largest mobile market. 

There are approximately 2.5 million iPhones in India, according to figures from analyst firm Canalys, which estimates Apple sold only 500,000 units in the country last year, or about a 10 percent growth--far below what it enjoys in other markets .

Furthermore, the majority of these sales occurred between October and December last year when the iPhone 5 launch helped triple quarter-on-quarter sales to 250,000 units, Canalys' research analyst Jessica Kwee told ZDNet Asia. "In 2012, Indian consumers upgraded their old iPhones or some mid-range customers were able to afford them," she added.

iPhone ownership, though, remains out of reach for the majority of India's population who cannot afford the upfront cost for the device which is not subsidized by local carriers.

However, Kwee believes Apple will enjoy significant growth in 2013 because of three major factors. First, Apple has partnered new distributors--Ingram Micro and Reddington--to access a larger sales footprint. Second, the company has a bigger team of sales and marketing staff to train service providers and retailers. Third, it introduced a new 12-month payment plan which is administered jointly by Apple and Indian financial institutions.

"Previously Apple focused on working together with the telco service providers, but I think it couldn't reach a lot of the cities in India," Kwee said. "They switched to distributors which have more coverage, especially for a country as big as India."

However, Apple will face hurdles. According to a recent article in The New York Times, a newspaper ad revealed the first instalment of an iPhone 5 was 5,056 rupees (US$94).

The overall cost for an iPhone 5 is over 45,000 rupees (US$833.3).

"This is almost two months' wages for an entry-level software engineer," the report noted.

Apple CEO Tim Cook professed his "love" for India last July during a conference call to discuss the company's earnings, but said India's multilayered distribution structure added cost to pushing its product to market. "In the intermediate term, there will be larger opportunities outside of [India] ," Cook said on the call.

Apple shipped just 5 percent of the 5.2 million smartphones which landed in India between October and December period last year, Canalys said. By comparison, the Samsung logo adorns 40 percent of all smartphones in India. 

Apple, however, did manage to dislodge BlackBerry in India , grabbing 15.6 percent market share in the fourth quarter of 2012, surpassing BlackBerry's 6 percent, according to IDC figures. Samsung had 38.8 percent market share.