India is the second largest smartphone market in the world next to China, and it recently surpassed the 400 million smartphone users mark. India will continue to grow its number of smartphone users to 700 million by 2022.
It is the highest growth rate estimate reported by any country in the world. According to the market research, by 2025 there will be over one billion Smartphones to be sold in India. According to Telecom Regulative Authority of India (TRAI), India recorded the highest growth in the world of active mobile phone users of 1.7 billion in 2017 resulting in an enormous increase in the market share of 20% YoY.
Apple today announced the appointment of Nokia’s Ashish Chowdhary to lead its India operations. The appointment comes at a time where Apple’s market share in India continues to fall all-time low as it hits 1% in Q2 2018 and the new head faces a daunting task of reviving the company’s market share and growth back in the country.
According to IDC, the Smartphone Market Share YoY in India highlights the competitive analysis by Vendor – Oct 2018 as below:
Apple in 2018 had a target of selling 2 million smartphones. However, sales dropped by 50% a million from last year. The reason being Indians baulk at high priced devices. iPhones have gone costlier, and the features and current specs aren’t that compelling whereas the install base of android has grown enormously and the new customer base declined significantly its lowest in recent history. Apple also changed its distribution strategy. Apart from this, its domestic assembling is yet to pick up the pace, which means the mobile phone giant is still relying on imports for its sales in India.
Reliance Jio has catalysed a rapid shift towards 4G LTE with affordable data pricing. The market is registering a double-digit growth and is seeing users migrate from feature phones to smartphones and from entry-level smartphones to more sophisticated devices.
Mid to upper-mid segment ($200-$400) grew faster than the overall smartphone market. With competition in mid to upper-mid segment growing in India, brands are looking to keep a balance between flagship-level features and pricing to drive profitability, and it will likely continue to be the ‘sweet-spot’ segment for the next two years,” the market research firm notes.
In summary, Tim Cook and Ashish Chowdhary cannot ignore the second largest market in the world and are required to come up with a compelling strategy to capture the market share once again. They will need to adopt an approach that has been implemented by many other players in the Industry. For, e.g., McDonald’s has customised its menu based on the local market’s food preferences and taste.
How can Apple regain the market share – A winning strategy
India is a Unique Market:
1. Apple’s iPhones remain an aspirational product for thrifty Indians. Majority of the segment purchase phones that are priced below $150. Apple sells iPhones which are high-priced in partnership with the service providers who subsidise the cost of the product, but the phones in India are sold in sans tie-up deals with the carriers.
2. iPhones have remained beyond budget. The less expensive iPhone X model is priced at INR 92,430/- ($1,450) in India, whereas the least expensive iPhone 8 unit ships at INR 66,120/- ($1040). The reason being Indian government imposes a heavy customs duty on importing electronic items. To circumvent the import duty, Apple manufactured the iPhone SE model in India through a partnership with Wistron, a Taiwanese manufacturer. The iPhone SE is the least expensive phone model available from the recent generations of iPhones in Indian market which still has not been able to capture the market.
3. Samsung and Chinese companies have gained control of 80% of the smartphone market in India. While Samsung and Xiaomi, in particular, have gained the momentum from offering a wide range of smartphones to customers that are affordable and available with all the latest features that address the local challenges. Samsung’s J2 line of smartphones is priced in the range of $100 to $150, the best selling handsets. Whereas Xiaomi’s Android-based MIUI OS, for instance, has integration with many popular local services such as Paytm. The software also offers features to block unwanted calls and texts, a persistent problem which millions of Indians face today.
4. Apple’s services catalogue for India market is relatively thin and overlooks several challenges unique to the country. Many services such as Apple Maps, offers sparse data mapping of the towns and cities and missing the landmarks quite often. Apple’s CarPlay an automobile infotainment system, though available on various car models in India, it does not offer basic navigation functionality. Similarly, Apple’s Siri, digital AI-powered assistant, doesn’t understand many words of Indian origin and often struggles to make sense of the Indian accents. Despite Apple adding a Hinglish keyboard in its recent iOS updates it is still isn’t good enough in comparison to the Amazon’s Alexa and Google Assistant.
How can Apple address some of the above mention challenges pertaining to the India Market: “Make for Indian Market.”
1. Apple should strategise to develop apps specific to the local market instead of chasing the Western audience. Similar to the other IT giants such as Microsoft, Google, and Facebook, who have launched specialised apps and customised many of their core services to make them work on India’s patchy and slow networks.
2. Apple should focus on establishing a manufacturing plant in India to manufacture custom-made mobile phones for Indian market segments concentrating on the price-range, features, and service offerings.
3. Apple to cater to the high-profile class of people in India who have the affordability but don’t have the brand’s recall.
4. Another major challenge is that Apple’s iPhone servicing is costly. The cost of replacing the battery in an Indian market is INR 2000/- ($ 30) which is very high by Indian standards and needs to be reduced significantly.
To summarise, India is a market which cannot be ignored by the number one company in the world. India market for Apple has still not hit the inflexion point. As a visionary, I see a huge potential and a significant market opportunity for Apple’s products for the Indian market. The immediate need of the hour is to get the marketing strategy right for Ashish Chowdhary. I hope Ashish you are listening.
