By Rishika Mittal
India is currently the second largest smartphone market globally. Rising disposable income, growing internet penetration and decreasing data costs are contributing to the fast-paced adoption of smartphones in the country. This increasing demand has attracted new players from both within and outside the country, to offer consumers a number of options and spoiling them for choice. According to International Data Corporation, smartphone companies shipped a total of 33.5 million units to India during the second quarter of 2018 (2Q18), resulting in a healthy 20% year-over-year growth.
For the last few quarters, Indian Smartphone industry is dominated by Chinese Smartphone brands such as Xiaomi, Oppo, Vivo, Huawei and OnePlus. Shockingly Apple, one of the most popular and premium smartphone is nowhere to be seen in the Indian market, why is that so? The following sections of the paper try to bring out some reasons for such an outcome.
Apple Smartphones in India
iPhones are one of the most premium smartphones in the world. More than 60% of the revenue generated by Apple is through, iPhones. The strategy followed by Apple in India went very well in the past years. However, in the last few years, Apple has witnessed a downfall in the amount of iPhone consumers in India. Currently, Apple accounts only for 1% in the market share of the Indian Smartphone Industry. India being the second largest smartphone market in the world, due to its population, has a humungous amount potential to make a smartphone brand flourish. But it seems that Apple hasn’t been able to extract this opportunity.
SWOT Analysis for iPhones
iPhones as a smartphone associated with Apple has a brand advantage over any other smartphone in the market. Apple is a global and among the most valuable brands in the world, which provides its products a distinct advantage. Besides the brand advantage, Apple iPhones have always been associated with innovation and technological revolutions. The IOS which is an operating system used in iPhones is a well renowned respected mobile platform for speed and flexibility. All this allows Apple to alter consumers purchasing behavior.
The inability to match the pricing strategy of its competitors in the market is the biggest weakness for Apple. Though India is the second largest market of smartphones, the vast majority of Indian consumers prefer to buy cheaper smartphones. Along with the price, there are certain other features of iPhones that restrict the consumers from purchasing it. This includes the absence of Bluetooth, non-removable and non-expandable battery. One of the features for which Apple is known is consistency in design. But consumers in India, prefer to have a different look when they buy a new phone, which iPhones don’t provide.
The Indian Smartphone Market is an expanding market. With the continuously increasing population, the market also tends to rise. According to International Data Corporation, the Indian Smartphone Market saw a healthy rise of 20% in the second quarter of 2018. Thus, Apple has a huge chance to extract this opportunity and expand.
One of the biggest threats to Apple iPhone is the fierce competition from the existing players in the market, which offer an alternative operating system, Android, at more affordable prices, with the latest technology, such as Xiaomi, OnePlus, Vivo, and Huawei.
Why the iPhone is so expensive in India?
The price of an iPhone in the US or for that matter many other countries is very low as compared to India. For example, the iPhone X in the USA was launched at $999 whereas in India it was launched at $1436. The price for Apple smartphones in India is so high as compared to other countries because India’s foreign policy towards foreign investment says for a single brand like Apple to set up its own store in the country, it has to source at least 30% of its product components locally, which currently Apple doesn’t. So, Apple operates through retail shops in India which add to the operational costs of the company. In addition to that, there is a 12% Good and Services Taxes and a 15% customs duty (as of December 2017). All this accounts for an expensive iPhone in the Indian Market.
It was mocked by an Indian news channel India Today that “iPhone X is so expensive in India that you can go to Hong Kong, buy it, and come back and save money”.[i] According to Counterpoint and IDC, most of the Indian consumers prefer to buy a smartphone below worth $150, leaving Apple iPhone as an aspirational product for the vast segment of Indian consumers.
However the competitors of iPhone in the Indian Smartphone Market, like the Chinese smartphones such as One Plus, Xiaomi, Vivo and Huawei, provide a better alternative to the Indian consumers through a similar level of technology and a much cheaper price by assembling smartphones locally and opening up of the research and development centre in the country. One reason behind this is the encouragement of the ‘Make in India’ campaign by PM Narendra Modi, which compelled these brands to begin their production in India itself in order to sustain in the market by providing a cheap price to the consumers. If these brands had not followed this path, they would have been struggling in India like Apple due to the additional costs, which would have made their smartphone expensive in India and not a viable choice for most of the Indian consumers.
Rishika Mittal is a student of B.A. (Hons.) Economics in O.P. Jindal Global University.
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