Apple Has Encountered 'Little Success' Growing in India Due to High Prices of iPhones

[MacRumors]

The Wall Street Journal has published an in-depth look at Apple's efforts to grow its sales in India, the "world's biggest untapped tech market." With smartphone sales flattening in saturated markets like the United States, Apple is said to have turned to India for new growth, but with "little success so far."

The report claims that just one in four Indians own a smartphone, providing Apple with an opportunity to sell iPhones to millions of new customers in the country. The issue is that India is a very price-sensitive market, with more than 75 percent of the smartphones sold in the country costing "less than $250."

Apple-authorized reseller Flipkart continues to sell the iPhone SE in India for around $250, but other iPhone models are priced between the equivalent of $325 and $1,950 in the country, well above the budgets of many Indian customers.

The Wall Street Journal explains:

At the heart of the issue is Apple's reluctance to change its traditional business model for selling the iPhone. Rather than make a range of handsets, it has prioritized a limited number of coveted products, sold at high prices--a strategy that revived the company after near bankruptcy in 1997 and helped make it the first U.S. public company to reach a $1 trillion valuation.

The report claims the number of iPhones shipped in India has fallen 40 percent so far this year compared with 2017, and Apple's market share in the country has dropped to about one percent from about two percent, citing research firm Canalys.

Apple created a five-year plan to increase Apple's sales in India to $5 billion by 2020, but the iPhone maker posted revenues of $1.8 billion in the country in its most recent fiscal year, according to the report, suggesting that the company is unlikely to meet its target without explosive growth within the next fiscal year.

Government policies haven't helped the situation. Apple has faced difficulties in openings its first retail store in India, for example, as the country requires single-brand, majority-foreign-owned retailers to source at least 30 percent of their manufacturing materials from India-based suppliers.

As one would expect, though, Apple CEO Tim Cook remains optimistic about Apple's future in India based on his recent comments.

"We've had really great productive discussions with the Indian government and I fully expect that at some point they will agree to allow us to bring our stores into the country," Cook said on Apple's earnings call last month. "We've been in discussions with them and the discussions are going quite well."

"I am a big believer in India," he added. "I am very bullish on the country, and the people, and our ability to do well there."

Article Link: Apple Has Encountered 'Little Success' Growing in India Due to High Prices of iPhones

 

[Caliber26]

I am in shock.

 

[rgbrock1]

Trying to sell a phone which costs much more than the annual salary of a perspective customer is an exercise in futility. What is it that Apple doesn't understand about this?

 

[Pepe4life]

Why does apple even bother with India? Their government imposes ridiculous restrictions on foreign companies and their people are too poor to afford iPhones.

 

[mozumder]

Also, you have to bribe a million people just to open a store...

 

[FrenchRoasted]

How will opening an Apple store make iPhones less expensive?

 

[Abs_p]

Why does apple even bother with India? Their government imposes ridiculous restrictions on foreign companies and their people are too poor to afford iPhones.

Even if just 5% of Indians bought iPhones, they would still have 50million customers.Not rocket science, is it?

 

[Pepe4life]

Even if just 5% of Indians bought iPhones, they would still have 50million customers.Not rocket science, is it?

At the cost of having to set up manufacturing in India and comply with their draconian laws.

 

[rbrian]

Trying to sell a phone which costs much more than the annual salary of a perspective customer is an exercise in futility. What is it that Apple doesn't understand about this?

I stopped buying iPhones when they put the price up to more than half my monthly income, and switched to Android.

 

[falainber]

Well. If Apple continues on its path, iPhone share in US (and elsewhere) may drop to 1% in no time.

 

[jscipione]

This is the real reason why there is no iPhone SE2.

 

[timber]

Why does apple even bother with India? Their government imposes ridiculous restrictions on foreign companies and their people are too poor to afford iPhones.

Well even if 1 % of the population can afford an iPhone that leaves you with 13 million potential customers which is more than the entire population (including children, poor, rich, whatever) of several European countries that Apple does serve.

 

[Abs_p]

At the cost of having to set up manufacturing in India and comply with their draconian laws.

Wistron already has a plant there.

It would just need a few modifications.

Only an idiot would ignore a country of 1.3billion, 1% of 1.3bil is 13mil. 5% is 65mil. Even if just 5% of Indians buy an apple product, Apple will still make billions.

 

[maflynn]

iPhone models are priced between the equivalent of $325 and $1,950 in the country, well above the budgets of many Indian customers.

I'd say iPhone prices in the US are well above many US customers, not just Indian, and that may be one reason why sales are slowing in the US

 

[Abs_p]

I'd say iPhone prices in the US are well above many US customers, not just Indian, and that may be one reason why sales are slowing in the US

Lol this. I am a doctor, make enough money to afford any iPhone on market right now but I still wont ever spend $1400 on an iPhone, even $1000 makes me think twice.

 

[AutisticGuy]

Tim Cook has failed to establish himself in pretty much any “up and coming” markets including China. I’m not sure why he gets such an easy pass by Apple fans when it comes to this. Fact is, Tim Cook needed to raise prices in hopes that the Western markets will open up their purse strings and pay for this failure. This is not a CEO who planned for long term growth, and it’s going to show in the near future.

 

[JPack]

The report claims that just one in four Indians own a smartphone, providing Apple with an opportunity to sell iPhones to millions of new customers in the country. The issue is that India is a very price-sensitive market, with more than 75 percent of the smartphones sold in the country costing "less than $250."

Right there is the main problem.

Keep in mind the average selling price of a smartphone in India is $157.

The majority of Indian consumers can't afford a phone of any kind. More 50% of the phones that do sell in India are feature phones (dumb phones). Smartphones represent less than half of the sales. And Tim Cook is trying to sell expensive smartphones.

 

[spacebro]

I worked with some Indian engineers who all had MacBooks. They paid over a year's salary for those MacBooks. They spend more of their salary on their MacBook than Americans typically spend on cars.

 

[Val-kyrie]

Even if just 5% of Indians bought iPhones, they would still have 50million customers.Not rocket science, is it?

Too bad Apple’s market share is dropping there.

Apple just refuses to accept the fact that not every market functions in the same manner.

 

[Enclavean]

Interestingly enough, in Thailand you will see more people with iPhones because even the poorer people are willing to sacrifice more to get that status. It's not uncommon to see people with cars as expensive as their house instead of, you know, getting a house thats twice as nice because cars are a status symbol.

 

[WannaGoMac]

All businesses with physical products (i.e. not software) have this issue in 3rd world economies. Fact is, those economies at best can afford only offer extremely inexpensive products, which means next to nothing margins.

 

[MagicWok]

I think Apple deserve their level of success.

 

[milkrocket]

IDK Samsung/Google etc seem to have no issues selling Premium Phones in India.

The issue is not the price, it is the ecosystem. Apple phones just do not work well in the Windows/Google ecosystem and the rich people who can afford them, are normally not very computer savvy.

To fix this, Apple needs to whole hog. With the whole ecosystem. That is the only way I feel it would work.

 

[critter13]

the iPhone SE is still a great phone, feels almost as fast as my X, i would think it would do well in India.

 

[Westside guy]

Lol this. I am a doctor, make enough money to afford any iPhone on market right now but I still wont ever spend $1400 on an iPhone, even $1000 makes me think twice.

Yeah, I would hazard to guess there are a lot of people who nowadays just don't see the value in dropping $800-$1200 for a new phone when their current phone (or, for that matter, a new $400 non-iPhone) does everything they need or want a phone to do.