Apple Inc. (NASDAQ:AAPL) is starting to push for greater market share in India, but the nation’s economy could throw a wrench into the works. The Economic Times, a newspaper in India, reports that the company is opening stores within stores in a number of India’s small towns. Currently Apple is looking for 100 standalone franchises.
Apple outsold by Windows Phone in India
Apple Inc. (NASDAQ:AAPL) has such a small market share in India that Microsoft Corporation (NASDAQ:MSFT)’s Windows Phone is actually more popular there. Google Inc (NASDAQ:GOOG)’s Android operating system holds 91 percent of the market share in India, while Windows Phone has a 5.4 percent and Apple holds just a 2.3 percent share there.
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Apple’s big problem in India may be the price tag on its products. The exceptionally weak Indian rupee also isn’t helping matters, and neither is the fact that most Indian mobile carriers do not subsidize their phones. Minyanville contributor Vincent Trivett suggests (via MarketWatch) that the weak Indian economy could cause problems for Apple Inc. (NASDAQ:AAPL) as it tries to grow its market share there.
India could pose an extreme case for Apple’s hefty price tag
Of course it’s no secret that Apple’s products are expensive, but when it comes to paying for an iPhone in rupees, that price tag becomes even more extreme. According to Trivett, Indians with an average income would have to pay eight months of their salary just to buy an iPhone. The iPhone 5 is priced at 45,000 rupees. Currently the average per capital income is 68,747 rupees. Even Samsung’s Galaxy S4 is a few thousand rupees less than the iPhone.
The majority of smartphones sell for between 7,000 rupees and 12,000 rupees, mostly toward the lower end of that range. Even Apple Inc. (NASDAQ:AAPL)’s new “low-cost” iPhone 5C is likely to be too expensive for many people in India to afford, especially because the nation charges hefty import taxes.
The rupee plunged over the summer
Even wealthier Indians have a difficult time affording an iPhone since the value of the rupee itself plunged over the summer amidst concerns about the U.S. Federal Reserve’s decision to begin tapering. It fell from 53 rupees against the dollar to 68. India’s economy is also slowing down. In the three months between April and June, the nation’s economy grew 4.4 percent on an annual rate, which is the slowest rate it has recorded in four years.
Apple’s top competitor Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) raised prices on its handsets in India, although Apple allowed its margins to erode in an attempt to grab market share from Samsung. The company also began offering financing and discounts and is still looking toward older iPhone models as a potential source of market share in India.