By Rishika Mittal
Consumer’s willingness to buy
Apple can only increase its unit sales by targeting three kinds of consumer i.e. new buyers, switchers and already existing customers. In India, where every day 63,360 people are pulled out of poverty and have started to use a phone for the first time in their life, they hardly go for a smartphone. These consumers prefer to buy a cheap feature phone such as the Jio phone, which is almost free. Apple being one of the most premium smartphones of the entire smartphone segment is clearly not an option for these new buyers. Thus, Apple tends to lose out its sales to these cheap feature phones or low prices smartphones.
The story for the second kind of consumers runs on a similar track. These consumers who are switching their smartphone from one brand to another tend to look for certain features before buying their phone as mentioned by a smartphone retailer in Hyderabad. The basic criteria according to him in order to buy a smartphone the first parameter is the estimated amount they are willing to spend. In order to elaborate upon his claims, a survey was conducted among 100 respondents, determined stratified random sampling. According to the respondents, the main amount range they are willing to spend on a smartphone is Rs. 5000-30,000 as claimed by 50% of them.
Apple smartphones clearly don’t fall in this range, leaving the consumers to opt for a rival low priced smartphone. The second parameter suggested by the retailer is the number of sim cards the smartphone can operate on. 63% of the respondents claimed that they prefer a dual-sim phone over a single sim phone, and again Apple has a fail situation in this as compared to its rivals. The third category is the size of RAM the phone consists of and whether it can be expanded according to the requirement. Again, Apple fails to meet this criterion. The only criterion where Apple beats its rivals is the brand advantage. According to 85% of the respondents, Apple smartphones are more about the status symbol they carry in the market and bring for the consumer rather than its features. This increases the consumer’s willingness to buy an iPhone when in need of the pride associated with products.
The third kind of consumers, i.e. existing customers are the most worrisome issue for Apple. For an average person, phone upgrade from 2-3 years has become a matter of 3-4 years or whenever the phone fails to upgrade. Premium smartphone companies are in the business of making better, longer lasting devices that will entice more people to upgrade now but will also make them less eager to upgrade in the future. The point has arrived where most people are happy with what they have and are less willing to bring about changes. This has resulted in a backfire for Apple smartphones. Their biggest strength is making them lose out customers in the market.
The Problematic Ecosystem
Apple as a brand is renowned for its innovation and technology. However, there still continues certain features of an iPhone that the Indian Consumers believe are a joke to them and find better alternatives from other service providers such as Google. The Indian consumers find Apple Music as a favorable option over its rivals due to its improved catalog and affordable subscription however features such as Apple Maps and Siri is widely criticized. According to the Indian consumers, Apple Maps has sparse data for a number of cities and towns, it often misses landmarks and lacks a very essential turn by turn direction feature. All these are well sufficed by rival providers such as Google Maps, making Apple Maps an unfavorable option. The next problematic feature is the phone assistant, Siri. It is considered to be a very helpful phone assistant worldwide, however, it lacks this qualification in India. For Indian users, Siri is a feature that requires a struggle to deal with. It fails to recognize many words of the Indian origination and struggles to make sense and respond correctly to the local Indian accents. Other than this there are many other features in which iPhone lacks as compared other smartphones present in the market. Indians love features like dual-sim and expandable storage for their convenience. Apple lacks both.
After India’s demonetization move in late 2016, many tech giants, such as Samsung and Google launched their payment services in the country, such as Samsung Pay and Google Pay, but there is still no sign of Apple Pay in the country. In order to make purchases from iCloud and App store, a user requires a credit card to make payments. In a country with a population of about 1.32 billion people, only 36.24 million people own a credit card according to the January 2018 RBI report. This shows that for the smartphone consumers in India, owning a credit card is necessary to make optimum use of their phone, if they opt for an Apple smartphone.
Other than the issues with the features present in the phone, Apple is also at a disadvantage in India because of their inability to inculcate the cultural diversity in their catalog. India is a country with huge diversity, and people in India are grown by adapting into this environment and this somewhat shows in their preferences as well. The kind of smartphone they purchase is also dependent upon this. However, Apple provides a catalog of its products and all the products have a consistent design. This restricts the consumer to use anything different when they buy a new smartphone, for an already existing customer.
Initiatives by Apple for the Indian Smartphone Market
India being the second largest smartphone market in the world offers enormous opportunities to Apple to increase its revenues. To reach out to as many customers it can, Apple in India operated through telecommunication companies. So far Apple in India has partnered with Reliance Jio, Bharti Airtel and others who provide 4G services to bundle data services with free voice calls and certain cashback offer to boost up the sale in India.
Other than this in order to pass through India’s foreign policy towards the foreign investment of sourcing at least 30% of its components locally, Apple started to assemble the iPhone SE model in India through Taiwanese contractor Wistron. Assembling iPhones in India will also endear to the company to PM Narendra Modi, who has been pushing for more local manufacturing job under “Make in India” initiative. It will also help Apple in making its low to mid-range smartphones to be price competitive with its rivals in the market. However, the outcome was not as favorable as expected. The low priced iPhone SE models, according to New York Times Report account only for 15% of Indian iPhone sales, whereas the market is taken over by the imported and high priced iPhone 6 models, which account for roughly a third of the sales. Even though shifting production of iPhones in India will help Apple curb the steeply rising tariffs however, in terms of price, Apple is still losing out to its Chinese competitors in the market.
Rishika Mittal is a student of B.A. (Hons.) Economics in O.P. Jindal Global University.
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- Image Source: cultofmac