5 Challenges for Apple as it Aims at a Bigger Bite of India - 'The Place To Be'
Apple is in India. And has chosen none other than India's Silicon Valley to manufacture Make in India Apple products.
Research firm Strategy Analytics's report says Apple has taken over the world #1 position in smartphone sales worldwide in the fourth quarter of 2016. Chief Executive Officer Tim Cook said on an earnings call this week said Apple's 2015-16 sales increased 56 percent from INR 6,472 crore a year before.
This comes at a time when arch-rival Samsung faced consumer backlash for exploding batteries of the company's Note 7 series. Huawei, Oppo and Vivo took the consecutive positions in the world leadership hierarchy according to Strategy Analytics.
It is no surprise Apple wants to bite in the largest chunk of the Indian consumer's pie. As per Counterpoint Technology Market Research, Apple is now the 10th biggest smartphone vendor, and top premium smartphone player in India. However, the company accounts for less than 2 percent of shipments in India, where an estimated 750 million smartphones will be sold by 2020.
In its recent earnings call, Cook said India is the 'place to be'. As Apple looks to increase its share in India, there are 5 key challenges the company may face.
Apple iPhone prices have only been escalating since the first edition. The latest iPhone 7 priced between INR 60,000- INR 90,000 category is well out of the reach of the common man in India and falls short of meeting the demand of majority of consumers. Apple's other offering such Apple Watch, MACs as well as accessories all come under high-end categories.
Chinese opponents such Xiaomi and Huawei have much cheaper offerings and Apple stands to face stiff competition from such brands in India.
Meeting the demand of the world's second-largest country will not turn out to be as easy it appears to. Majority of India's population is yet to acquire smartphones and with Indian Prime Minister Narendra Modi's Digital India drive, an increase in cheaper versions of smartphones has begun.
Apple CEO Tim Cook recently said that Apple was witnessing double-digit growth in both Mainland China and India and the company is attracting a very high percentage of first-time tablet buyers. However, the demand for Apple's tablets may not continue as expected since smartphones are slowly emerging as a popular choice among new digital-savvy customers.
Apple is late to the party! While almost all smartphone makers fiercely battling to take a larger chunk of the market by offering cheaper versions, Apple also lost out on the opportunity it saw in selling second-hand phones in the Indian market. Last year, the Cupertino-based smartphone maker faced rejection from the Indian government on selling used phones to prevent dumping of hazardous electronic waste.
One could argue when Apple's products for the Indian masses would be available such that they can be readily bought by the country's consumers. By the time Apple sets shop, hope it doesn't get too late for it to establish dominance.
Post widespread saturation in the western nations, Apple is aiming to start manufacturing in India to boost sales.
Cheaper upcoming brands such as Oppo & Vivo and home-grown ones such as Micromax have seen significant interest from the large smartphone user base in India. Chinese companies including Gionee and ZTE are also clawing into India at a fast pace. This may put Apple in a position where it will only be limited to the wealthy.
Make In India
Apple plans to manufacture iPhones in India will bring some brownie points to the company. However, Cook's attempts to enter the aggressive Indian market have been seeing hindrances by the company's demands of a 15-year tax holiday on imports of components and equipment.
While the Indian government has agreed to the a manufacturing unit in the country, no incentives have yet been finalised.
At a time when every global giant wants to set it's foot in India's growing market, the Indian government is unlikely to relent to Apple's demands and may go ahead with pushing home-grown companies to produce high-quality products.
Indian-make companies such as Karbonn Mobiles, Lava International, Micromax Informatics and LYF are producing smartphone of the aam aadmi and have bee riding on the Make in India drive.