Apple sees disappointing iPhone sales in India
India is the third-largest smartphone market worldwide, after China and the United States. In the second quarter of the year, vendors shipped just over 30 million devices, the vast majority of which run Android. That is no different than what is happening in the other leading markets, China and United States, except for one thing: iPhone sales.
Apple is a major player in both China and United States, where its market share is well into double digits. However, in India, the iPhone is not as appealing to local shoppers, as only 2.4 percent of the smartphones shipped in Q2 2016 feature Apple's logo on the back.
Smartphone shipments in India totaled 30.7 million units, according to Strategy Analytics, and Apple only moved 0.8 million of them. Meanwhile, Android vendors shipped 29.8 million units, which gives the open-source operating system a market share of 97.1 percent. Other platforms are basically irrelevant, thanks to shipments of just 0.1 million smartphones.
If we look at the year-over-year figures, Apple actually lost ground to Android vendors. In Q2 2015, iPhone shipments reached 1.2 million units, which translated to a market share of 4.5 percent. That was not fantastic either, but it was at least higher. Trouble is, Apple seems to have few options to grow in the country.
"Apple iOS will need to reduce iPhone pricing to cheaper levels, attract more operator subsidies and enlarge its retail presence through Apple stores or online channels if it wants to regrow significantly in the future", says Strategy Analytics director Woody Oh.
We can rule out lowering the price of the iPhone, as this would be uncharacteristic of Apple. The company sells premium products, which are priced accordingly, and the only way they usually get cheaper is if there is a new model superseding them in the lineup.
Carrier subsidies are also tricky, because smartphone buyers in India typically get their devices from retailers and not mobile operators. This is different from how things work in the US and other major markets, and there is little that Apple can do about it, at least in the short term.
Apple could try to build iPhones in India to keep manufacturing costs down and maybe keep sales taxes to a minimum. That is certainly an option, but there are no concrete plans yet to do so -- that we know of. Apple could certainly use a local partner, like Foxconn, to make an Indian-made iPhone happen, so this is a real possibility.
Apple is already trying to increase its retail presence in the country, as the company is now allowed to open stores in India. Apple could also partner with local retailers to make iPhones more easily available to potential buyers in India, which can also pay dividends.
Smartphone sales in India may be low at the moment, if we look at how many units have been shipped, but this will change in the future. "India is growing quickly due to low smartphone penetration rates, an expanding middle class with more disposable income, and intense competition among major vendors, retailers and operators", says Strategy Analytics. And Apple, which has seen its smartphone sales drop, should do everything that it can to make sure local buyers see the iPhone as an attractive option in the premium segment.