Apple Inc. (NASDAQ:AAPL) has ignored the rapidly growing Indian smartphone market for years. The Cupertino-based company began focusing on India last year, only after realizing that it can no longer stay ahead without solid presence in the Asian nation. India has become the world’s second largest mobile market with more than 800 million active users. According to research firm IDC, smartphone shipments more than doubled to 41.4 million in 2013. IDC estimates the annual shipment to reach 129 million units in 2015. Growing income is likely to boost the smartphone shipments.
Will Apple fit into India?
A hefty price tag is the biggest problem for Apple Inc. (NASDAQ:AAPL). India is a country where pizzas sell for 75 cents, Coke for 17 cents and a good meal at a decent hotel for less than $1.50. More than 80% of smartphones sold in the country cost below $400. In contrast, the cheapest iPhone available (4S) costs above $500 in India. Meanwhile, Apple Inc. (NASDAQ:AAPL)’s arch-rival Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and the home-grown Micromax are ruling the Indian market. According to IDC, the Korean electronics giant has a 26% market share, while Micromax has occupied another 22%.
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Apple Inc. (NASDAQ:AAPL) is trapped in the pricing-versus-branding issue. The company can’t sell very well if it slashes prices. If it focuses on the brand and maintains a higher price tag, its smartphones will be unaffordable to a larger section of Indian buyers. Last year, the tech giant came up with marketing strategies that made low-end iPhones such as 4S, 5, and 5C affordable to some Indian buyers. It skyrocketed Apple Inc. (NASDAQ:AAPL)’s sales in the country by more than 400%.
Apple vs. Samsung and Micromax
Apple Inc. (NASDAQ:AAPL) started offering iPhones on EMI (equated monthly installments) of 6, 12, and 18 months. The lucrative payment plan was just one of many enticements. Apple Inc. (NASDAQ:AAPL) advertised some of its offers heavily, such as multiple deals and trading in old smartphones. The company touched the right nerves without affecting its brand because it made iPhones cheaper without appearing cheaper.
But Apple Inc. (NASDAQ:AAPL) is still confined to only big cities. Though the company plans to penetrate into small towns by opening new stores over the next few years. But it might be too late as Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) is offering a number of smartphones at every price point. The Korean company is wildly popular among Indian consumers, and it has build a strong network of resellers and distributors over more than a decade. Moreover, the home-grown Micromax has also started eating into Apple Inc. (NASDAQ:AAPL)’s target market by unveiling many successful high-end Android smartphones. Micromax has also signed a deal with Hollywood superstar Hugh Jackman to promote its higher-end smartphones. The battle isn’t easy for Apple Inc. (NASDAQ:AAPL).
Apple Inc. (NASDAQ:AAPL) shares rose 1.70% to $542.02 at 11:34 AM EST.