Apple Looks to Distributors to Expand iPhone Sales in India

MacRumors · Oct 18, 2012

The Wall Street Journal reports that Apple is on the verge of a significant expansion of its iPhone sales effort in India, bringing on two large distribution companies to help bring the device to more points of sale. The iPhone has so far been available almost exclusively through mobile phone carriers in the country, but with the iPhone 5 reportedly launching next week, the company appears to be significantly expanding its operations.

A person who has knowledge of the plans says Apple will begin selling the iPhone through specialized distribution companies in an attempt to reach a wider audience, especially Indians who live in thousands of smaller towns.

The Cupertino, Calif. company has recently tied up the local operations of Ingram Micro Inc., a large U.S.-based distributor of technology, and Redington (India) Ltd., a local distributor with 12,000 smaller partners across the country, the person said.

Apple has existing relationships with the two distribution companies, using them to offer products such as the iPad but reportedly having held the iPhone back from them for fear of eating into profit margins.

But with Apple's share of the mobile phone market in India falling by half year-over-year to 1.2% in the second quarter, the company may now be willing to sacrifice some profits in an effort to bolster its position in the country. Still, analysts believe that Apple's market share will remain low there given the premium pricing and the fact that over 70% of phones sold in the country are priced at under $100.

While Apple has been most heavily focused on China among emerging markets, there have been signs that the company is looking at the possibility of expanding its presence in India. Earlier this year it was reported that Apple was looking at opening retail stores in the country, but requirements for domestic sourcing of materials appear to be hindering those plans. In the absence of Apple-owned retail stores, the company earlier this year was also hiring staff for an effort to expand its reseller network in the country.

Article Link: Apple Looks to Distributors to Expand iPhone Sales in India

illegalprelude · Oct 18, 2012

While market share is nice, as Apple has previously shown, they care more about profits than a number which is what I believe in as well. With that said, Apple does have lower priced phones like the 3GS and 4 that they could offer there. If most people prefer a under $100, than offer them that, not your flagship phone.

colbertnation · Oct 18, 2012

Hey Eric Slivka, Arn, and MacRumors team,

I think it is important to mention in your articles about India and China some absolute numbers, on top of relative percentage numbers. While it is true that 70% of the phones sold in India are priced under $100, that also means that 30% of the phones sold are priced above $100. 30% might not seem like a lot, but if you put that in absolute terms, that represents 75 million handsets in India. (Source: Rediff Business article).

Also, it might be beneficial to include absolute population terms. If we assume that the iPhone 5 16GB version (being sold at say $800) is only affordable to say 3% of the total population of India, then it will not seem that much. To many uninformed people, it will simply be "3%?! That's it?! Why bother."

But in absolute terms, 3% of the Indian population represents 33 million people.

That's a potential customer base that can rival most European countries, only if looked on an absolute number scale.

That's why, my humble opinion is that MacRumors should include absolute numbers when talking about the two heavily populated countries like India and China. Thanks!

bitcloudrzr · Oct 18, 2012

colbertnation said:
Hey Eric Slivka, Arn, and MacRumors team,

I think it is important to mention in your articles about India and China some absolute numbers, on top of relative percentage numbers. While it is true that 70% of the phones sold in India are priced under $100, that also means that 30% of the phones sold are priced above $100. 30% might not seem like a lot, but if you put that in absolute terms, that represents 75 million handsets in India. (Source: Rediff Business article).

Also, it might be beneficial to include absolute population terms. If we assume that the iPhone 5 16GB version (being sold at say $800) is only affordable to say 3% of the total population of India, then it will not seem that much. To many uninformed people, it will simply be "3%?! That's it?! Why bother."

But in absolute terms, 3% of the Indian population represents 33 million people.

That's a potential customer base that can rival most European countries, only if looked on an absolute number scale.

That's why, my humble opinion is that MacRumors should include absolute numbers when talking about the two heavily populated countries like India and China. Thanks!

33 million, that's the entire population of Canada, which certainly buys a lot of iPhones.

lee14160 · Oct 18, 2012

With other a billion possible customers Apple really needs to look in finding a way to tap that base. Sometimes you just have to start out low then work your way up once you have the customer base eating out of your hand. . .U.S. is a great example. . .

zosokm · Oct 18, 2012

Apple has to lower it's prices for India to capture the market. Although Iphone is a premium product and many buyers don't mind paying more it is ridiculous to pay more than what is paid in the US when you consider that India is still a developing country. I bought my iPhone 4 2 years ago for 650 $ in India. However with the release of the 4S ( which was priced at 850$) , the iPhone 4 price was increased to 700$ for a lower model(8gb)!!

Currently iPhone 4S is more expensive than the more recent Samsung Galaxy S 3. Samsung has 51% market share where Apple has1%.

Apple should bear the currency exchange fluctuations and try to keep prices reasonable ( even if is around what they charge in the US- but not 20-30% more)

Unfortunately carriers do not subsidize iPhones like the US

If Apple prices the iPhone 5 smartly I would still buy it .

smdc76 · Oct 18, 2012

Leave India to Nokia(Micro****) and Google. That's not a market worth pursuing. The country doesn't get quality, and the only ones I see buying this are status conscious rich kids and their daddies, and that's a handful of them left in India cos most of them have already flown the coop.

joelvega125 · Oct 18, 2012

How about we make a phone with a screen bigger than 4 inches of. I'm glad I switched to a bigger gs3. Tired of apples crap.

aziatiklover · Oct 18, 2012

This piss me off! Why go else where! When you can't barely have supply for your own market in the US!

it has been 5 days now that i've been trying to get another iphone 5!

arjunj · Oct 18, 2012

smdc76 said:
Leave India to Nokia(Micro****) and Google. That's not a market worth pursuing. The country doesn't get quality, and the only ones I see buying this are status conscious rich kids and their daddies, and that's a handful of them left in India cos most of them have already flown the coop.

*applause* Where else do you see such wisdom, ladies and gentlemen?

I would like to thank you, kind sir, for taking the time out of your undoubtedly busy schedule to impart us lesser mortals with some much needed knowledge.

I could have sworn that India was one of the largest markets in the world for anything premium and seeing that every second person here seems to own something from the Apple product line, I would've considered it a massive untapped market for Apple. But obviously I was wrong - as you've told us, the country just doesn't get quality, right?

KiwiAdventure · Oct 18, 2012

How about Apple supplying the market they have. It's still 3- 4 weeks for supply

Ramchi · Oct 18, 2012

Not an easy Market

India is not an easy market for Apple. In India people either adore or dethrone brands. Most of the times purely based on COST.

Talk to any business man to the common man who normally uses mobile phones, no one will spend Rs 50,000 for a mobile phone, not even for a Laptop, not even for an iPad!

Apple is neither Mercedes nor Nokia! Nokia catered to almost all segments. Where they failed was in touch screen; even when Sony Ericsson was successfully pushing its P990 etc...Nokia failed to see the light

If Apple is like Merc (out of reach for 99.99%) Indian elites with lots of stashed money will let it out - like someone mentioned rich spoil brats who have enough daddies' money to spend.

Indian regulations are slightly strange and may not work for Apple if they do not believe in bribery! Inspite of that Apple is doing a great job and what they cater now is what they can in India considering all the limitations.

BC2009 · Oct 18, 2012

joelvega125 said:
How about we make a phone with a screen bigger than 4 inches of. I'm glad I switched to a bigger gs3. Tired of apples crap.

How about you stay on topic, I'm tired of this "bigger is better" crap. If you wanted bigger you should have got a decent phone like the HTC One X. At least the One X does not flex and creak in your hand when you grip it. Also the One X has a better display by a wide margin. Either way if you really switched from iPhone to GS3 (assuming you are not just making this up and trolling) and you actually liked your new phone then why bother posting? All these supposed people who "left Apple and haven't looked back" just can't seem to leave Apple alone. Yet JD Power customer satisfaction surveys say 94% of iPhone owners intend to buy another iPhone. Somehow the plethora of forum posts like these doesn't match up with reality. I suppose the entire 6% who are dissatisfied with Apple all have MacRumors accounts.

japanime · Oct 18, 2012

Softbank, one of Japan's two carriers to officially offer the iPhone, recently announced a "trade-in" program in Softbank will buy back and then unlock customers' iPhones. These unlocked iPhones will then be sold by Softbank in overseas markets.

My guess is that India will be one of the major markets for these refurbished iPhones.

What's unfortunate is that Softbank continues to refuse to unlock iPhones for use by their own customers right here in Japan.

hrishidev · Oct 18, 2012

BC2009 said:
How about you stay on topic
I suppose the entire 6% who are dissatisfied with Apple all have MacRumors accounts.

Good one. Irrespective of topic , some Apple hating people just divert it to Apple Vs Others. Especially on forum dedicated to Apple

kshitijshah · Oct 19, 2012

smdc76 said:
Leave India to Nokia(Micro****) and Google. That's not a market worth pursuing. The country doesn't get quality, and the only ones I see buying this are status conscious rich kids and their daddies, and that's a handful of them left in India cos most of them have already flown the coop.

Is it a surprise that Samsung launched India on Day One. Nokia has India on priority list. India will drive growth for any sensible country in the world. The profit margins in India for Samsung are far greater than the rest of the world. That addresses Apple's focus on profitability.

vivferrari · Oct 19, 2012

smdc76 said:
Leave India to Nokia(Micro****) and Google. That's not a market worth pursuing. The country doesn't get quality, and the only ones I see buying this are status conscious rich kids and their daddies, and that's a handful of them left in India cos most of them have already flown the coop.

Nothing could be further from the truth. I am sure that if the iPhone cost 900 dollars in the US, Apple would not sell more than a few hundred thousand of them. Its dead cheap in the US due to subsidies by telecom companies and hence it sells.

----------

First of all the article is poorly researched. The issue that Apple faces in India is not not distribution, its pricing and partnerships. Steve Jobs busted his ***** in order to bring the telecom companies around, they just do not have the same kind of commitment when it comes to India. That is the bottomline.

hrishidev · Oct 19, 2012

aziatiklover said:
This piss me off! Why go else where! When you can't barely have supply for your own market in the US! it has been 5 days now that i've been trying to get another iphone 5!

Firstly Apple is global company. So every country is market for Apple. People in other countries always wait longer for availability for iPhone than US people. US citizen do get some preference while buying

If Apple waits longer to supply iPhone 5 in other countries ,people buy them from gray market at higher prices. These phones in gray market are bought in US and sold at higher prices. Because of which following are implications
1) There is increase in demand in US market
2) Apple loses profit which it can make buy selling using own distribution
3) Customer have to buy phone at higher prices making them unhappy or they opt not to buy iPhone.

Nobody except middlemen win.

When Apple serves other countries
1) Demand in US is because of consumers & not middlemen
2) Apple makes profit in distribution
3) People can wait for 15 days than paying more or sometimes double price.
(You can try in gray market of India for iPhone 5 , price is 100K Rs which is double than estimated price 50K Rs )

IGregory · Oct 19, 2012

I think the Indian population is more concern about their every day standard of living than a cell phone.

Jibbajabba · Oct 19, 2012

One problem with cheaper phones is the internet - if Apple sells at a lower margin - that is one thing, if they would lower the price, anoher. If he latter happens then expect tons of iPhones showing on up eBay which will be shipped from India.

Winni · Oct 19, 2012

IGregory said:
I think the Indian population is more concern about their every day standard of living than a cell phone.

I think you should travel the world first before you make wild assumptions based upon what you saw on underclass TV.

bushido · Oct 19, 2012

not surprised, BlackBerry still rocks India at least thats what i noticed earlier this year

kamalds · Oct 19, 2012

I am an Indian

Went to maket to buy a phone for my sister. Wanted to buy an iPhone but costs over $1100 so went for GS3 that retails at $600.

I use Note 2 btw.

iphoneclassic · Oct 19, 2012

smdc76 said:
Leave India to Nokia(Micro****) and Google. That's not a market worth pursuing. The country doesn't get quality, and the only ones I see buying this are status conscious rich kids and their daddies, and that's a handful of them left in India cos most of them have already flown the coop.

US iPhone sales are only 30%.

I read an article where people preorder IP5 in Dubai and travel to India to sell. There are reports of people paying $2500 for 64Gb model.

Apple is going to sell 16GB for $800. We don't know how much AT&T/Verizon/Sprint actually paying Apple. Best estimate is between $449-$649. So Apple will make more profit selling unlocked phones.

You misunderstood about quality consciousness in third world countries. Apple cannot get away with "Scratches are normal on aluminum" story in China or India.

zosokm · Oct 19, 2012

Indians are willing to pay a premium for Apple just like people all over the world are. But why should they pay 50-100% more than what people in other countries are paying? I bought an iMac 21 inch which is 1199 in the US for 1299 in India. But to pay 900-1000$ for a phone that's selling for 650 in the US is too much. I'm sure Apple would not sell the same number of phones in the US if you could only buy them unlocked for 900$!

Apple Looks to Distributors to Expand iPhone Sales in India

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