Apple making strong moves to increase iPhone marketshare in India

Wed, Feb 27, 2013


While one hesitates to say that iPhone growth has plataued, it’s certainly slowing down a bit compared to the growth Apple enjoyed just a few years ago.

That said, Apple is busying itself in other markets, realizing that there is a lot of untapped potential abroad. Specifically, Apple seems to be focusing its efforts in populous countries such as Brazil, India, and of course China.

Highlighting Apple’s recent efforts in India, the Wall Street Journal is reporting that Apple is adjusting its typical modus operandi in an attempt to make inroads in India, a country on track to become the world’s third largest smartphone market in 2013, behind China and the US.

Apple is sidestepping wireless carriers to seize greater control over marketing in India and offering no-interest loans to lure lower-income consumers. The company has also boosted staff in India by 30% to 170 employees in the past six months. And it is ramping up the introduction of other products, with the Apple TV video-streaming gadget expected to reach stores in coming weeks, people familiar with the matter say.

The result is that Apple shipped more than 252,000 iPhones to India in the quarter through December, more than triple the number in the previous three months, according to research firm Canalys.

252,000 is hardly an impressive figure, though the 300% jump demonstrates just how far Apple has come in a short time. Still, the iPhone comprises just 5% of total smartphone shipments to India, the Journal notes. And holding a 40% share in the smartphone market in India is, surprise surprise, Samsung.

The South Korean company surged ahead by making India a high-priority market earlier than Apple did and offering a range of phones based on Google’s Android software that start at just over $100. An older generation iPhone sells for around $500 while the latest model starts at nearly $850.

And indicative of Apple’s room for growth in the country, a recent report from Canalys revealed that Apple in 2012 shipped 19.6 million iPhones to China, 1.4 million to Brazil, and a paltry 460,000 units to India.

Put simply, there’s plenty of room for growth in India and with a number of substantive rumors all pointing to Apple working on a more economical iPhone set for release this Summer, Apple is by all accounts poised to make a heavy push into emerging markets and snap up some of the marketshare lower cost models from the likes of Samsung currently occupy.

Chief Executive Tim Cook has blamed India’s messy distribution networks. Unlike in the U.S., wireless carriers generally don’t have their own stores. Mobile devices in the country typically go through several layers—carriers, national and local distributors and mom-and-pop retail shops—before getting to consumers.

“The multilayer distribution there really adds to the cost of getting products to market,” Mr. Cook told analysts last summer.

Apple responded last autumn by overhauling its distribution. Instead of going through wireless carriers, Apple began working directly with two national distributors. The company now tightly controls everything about advertising, the amount of inventory entering the country and which cities are targeted and when, a person familiar with the strategy says.

Still, other practical challenges remain. For instance, despite an abundance of Apple retail stores in the US, you won’t find any in India on account of an Indian law which requires foreign retailers to “purchase 30% of the value of India sales from domestic suppliers.”

But with India seeking to encourage more foreign investment by working more closely with companies such as Apple, perhaps change will be rather fast to come. As it stands now, Apple employees approximately 2,000 mom and pop shops and “65 franchisee-owned “Apple shops in malls and other high-end spots.”

via Wall Street Journal


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