Apple Losing Ground to Android Competitors in India and China Due to Local Market Challenges

MacRumors

macrumors bot
Original poster
Apr 12, 2001
47,051
9,053



A pair of reports out this morning highlight Apple's ongoing struggles in India and China ahead of the company's Q2 2018 earnings results coming tomorrow, May 1. Within India, Apple has been dethroned as the country's top selling high-end smartphone maker in the January-March period, losing out to Samsung.

Specifically looking at India's "premium price segment" (devices priced above 30,000 rupees, or $452), Apple's market share was at 18 percent in the first calendar quarter of 2018, compared to 45 percent in the year-ago quarter. Apple not only lost out to Samsung for the quarter (50 percent), but also to OnePlus (25 percent), according to numbers reported by Counterpoint Research (via Nikkei).

Apple has faced ongoing struggles over iPhone prices in India, with the Indian government raising the custom duty on imported mobile phones twice in under two months in an effort to get smartphone makers to build products locally. While Apple has set up an iPhone SE assembly in India, and is looking into doing the same for the iPhone 6s, the continued tax hikes have greatly hindered its expansion in the country.


Samsung, on the other hand, has been manufacturing its smartphones locally in India for almost ten years, and got a boost in Q1 thanks to interest in the Galaxy S9, S9 Plus, and A8 Plus.
"Apple is likely to continue facing trouble in India in the near to mid-term, until it has a relatively cheaper product," said Neil Shah, research director at Counterpoint.

Apple will have to partner with a local manufacturing company to bring down the price of its devices, Shah said. "It will have to introduce devices in the 50,000 rupees to 60,000 rupees range to lure Indian customers."
The fear of Apple's "excessive prices" also extends to China, where researchers forecast Apple will see continued weakness during its second fiscal quarter results this week (via Business Insider). UBS analysts Steven Milunovich and Benjamin Wilson predict iPhone sales to decline to as low as 47 million in fiscal 2018, dropping from a peak of 71 million during a "stellar" year of sales for the iPhone 6s in 2015. In 2015 Apple owned a 54 percent share of the Chinese smartphone market, which is predicted to decline to 37 percent this year.

Similar to India, Apple's problem in China is that local brands offer far cheaper alternatives for customers to purchase. Apple is also lacking distributors and promoters outside China's "Tier 1" and "Tier 2" cities (Shanghai or Beijing), where "local brands make extensive use of promoters to influence consumer decisions," Milunovich explained. He continued: "Oppo, Vivo, and Huawei have over 100,000 promoters each versus Apple with only 4,000."
"We think it's doubtful China returns to its 2015 peak as local brands have caught up and upgrade cycles are lengthening; we expect a flattish market, give or take a few points of growth depending on the overall market and product cycle," the UBS team told clients recently. "At the peak in 2015, we believe Apple likely had 40-50% share with Tier 1 and 2 consumers; we think that figure is closer to 20-30% today."
Analysts are now waiting for a "supercycle" of user upgrades, meaning that a vast majority of Chinese iPhone owners would finally ditch their old models for a new update because of hardware additions that convince them it's time for the switch. As GBH Insights analyst Daniel Ives pointed out, this expected supercycle "keeps not happening" because users are holding onto their iPhones for longer periods of time, and also because recent iPhone generations lack compelling enough reasons to pay for the new version.

Now, researchers are looking toward the 2018 trio of iPhones to potentially become the catalyst for the supercycle. "Patience is wearing thin among investors on this elusive upgrade cycle with China playing a major role in the success or failure Apple will see over the coming year around this key product upgrade cycle," Ives said.

Article Link: Apple Losing Ground to Android Competitors in India and China Due to Local Market Challenges
 

VARDHANN

macrumors newbie
Mar 26, 2018
16
18
recently I was planing onto buying an iPhone, and the cost of iPhone 7 32 gb in India is similar to the cost of iPhone 8 64 gb... why will I buy an iPhone which is having huge price difference, and this is the biggest turnoff for me... the $1000 tag is not much for an average Indian when your are talking about an iPhone but if you are getting that same iPhone for $1400+ but everyone in the US is not then you feel cheated and thats why it is loosing...
[doublepost=1525100453][/doublepost]The biggest reason why Samsung wins is that the cost of every Samsung phone is similar to the global prices and sometimes it is even cheaper...
 

mtneer

macrumors 68030
Sep 15, 2012
2,767
1,840
recently I was planing onto buying an iPhone, and the cost of iPhone 7 32 gb in India is similar to the cost of iPhone 8 64 gb... why will I buy an iPhone which is having huge price difference, and this is the biggest turnoff for me... the $1000 tag is not much for an average Indian when your are talking about an iPhone but if you are getting that same iPhone for $1400+ but everyone in the US is not then you feel cheated and thats why it is loosing...
[doublepost=1525100453][/doublepost]The biggest reason why Samsung wins is that the cost of every Samsung phone is similar to the global prices and sometimes it is even cheaper...
A large part of that is due to the customs duty imposed by the Indian government. I don't know if you are Indian or not, if you are, then you should be calling your local lawmaker and demanding that the government remove all customs duties. That will make the price of imported products on par with the West, minus shipping.
 
  • Like
Reactions: Falhófnir

VARDHANN

macrumors newbie
Mar 26, 2018
16
18
A large part of that is due to the customs duty imposed by the Indian government. I don't know if you are Indian or not, if you are, then you should be calling your local lawmaker and demanding that the government remove all customs duties. That will make the price of imported products on par with the West, minus shipping.
Why should the government reduce the taxes in the first place??
if apple wants to sell its product in India then produce it locally and you might be knowing India is the 2nd most populous country in the world and 2nd most number of internet users is present here thats more than 500 million people. apple needs us we don't need apple... we can have Samsung, One plus, HONOR, Xiaomi, google, etc etc etc....

do you know if India starts producing its products locally then the average buyer will save more than $250 per phone... and you can buy a whole new phone with these $250..
 

nicho

macrumors 68030
Feb 15, 2008
2,862
1,364
Taxes or no taxes, Apple is a frustrating entity in China. The after care is more like "we don't care" - the big selling point of Apple is the genius bar and the ease of fixing something when things go wrong, but in Shenzhen for example there is still only one Apple Store - while they've opened up at least 3 new ones in the past few years in (less populated) Hong Kong.

Mail in service also isn't an option, as it is in some other countries. If people have to queue for hours to get their stuff fixed, they're going to be turned off Apple and go for cheaper alternatives.

I got my battery replaced a few weeks ago - I queued for almost 45 minutes and it wasn't ready for a full day. Xiaomi offer battery replacements in under an hour, and at even less than the reduced fee Apple is charging. No wonder people are going elsewhere.
 

VARDHANN

macrumors newbie
Mar 26, 2018
16
18
Taxes or no taxes, Apple is a frustrating entity in China. The after care is more like "we don't care" - the big selling point of Apple is the genius bar and the ease of fixing something when things go wrong, but in Shenzhen for example there is still only one Apple Store - while they've opened up at least 3 new ones in the past few years in (less populated) Hong Kong.

Mail in service also isn't an option, as it is in some other countries. If people have to queue for hours to get their stuff fixed, they're going to be turned off Apple and go for cheaper alternatives.

I got my battery replaced a few weeks ago - I queued for almost 45 minutes and it wasn't ready for a full day. Xiaomi offer battery replacements in under an hour, and at even less than the reduced fee Apple is charging. No wonder people are going elsewhere.

An interesting fact IN India Apple don't even has its own store.... they sell it through "Resellers" and "Premium Resellers"
 

mrklaw

macrumors 68020
Jan 29, 2008
2,376
752
Why should the government reduce the taxes in the first place??
if apple wants to sell its product in India then produce it locally and you might be knowing India is the 2nd most populous country in the world and 2nd most number of internet users is present here thats more than 500 million people. apple needs us we don't need apple... we can have Samsung, One plus, HONOR, Xiaomi, google, etc etc etc....

do you know if India starts producing its products locally then the average buyer will save more than $250 per phone... and you can buy a whole new phone with these $250..
In this ever more globalised world, where countries like India and China have huge export driven economies relying on other countries not penalising imports, its a bit hypocritical of them to be strongarming companies to produce locally, or even have to set up joint ventures to sell in the market.
 

JRobinsonJr

macrumors 6502a
Aug 20, 2015
635
1,121
Arlington, Texas
While there are certainly many factors involved here - local production versus taxed import, level of direct in-country support, etc. - this demonstrates one glaring hole in the Apple armor. By focusing on the Phone as a primary device, at the perceived exclusion of other products (real or imagined), they are putting most of there growth eggs in one basket. The iPhone may have reached or even breached it pricing peak and may need to drop for future models. The price versus value perception has changed thanks to Samsung and others.
 

dirt_farmer

macrumors regular
Apr 2, 2018
215
443
https://www.thetimes.co.uk/edition/business/apple-boss-tim-cook-mulls-400bn-payout-to-shareholders-73nsx353w

"Apple losing ground due to market challenges" is the most redundant and meaningless headline on Macrumors.

Of course they are losing ground due to market challenges -- that's why any company loses ground.

The truth is that Apple is losing ground because Apple has lost it's way.

They make weird, objectively bad, outdated laptops and their mobile presence is regressing. "Outrageously expensive phone with worse design and worse usability" is their big strategy, and the market has responded.

Apple will now literally pay shareholders not to run away -- that cash hoard that they could have used to invent the next great paradigm is now being used as bribe money to try to slow the fall of the share price as people catch wind of what they've done.

It's a sad chapter for a once great company.

Not with a bang but a whimper.
 

vertical smile

macrumors 601
Sep 23, 2014
4,292
5,392
This again? Seriously? Go buy some garbage robotphone. I'll keep my Apple product that won't randomly shut down due to the limitations of battery technology.
It probably wouldn't have the shutdown issues if it had a better battery in it.

Yes, there has been shutdown issues before, but not nearly the scale of battery related shutdowns of the 6 and 6s.

It sounds more like a design flaw than working as intended. The throttling was a bandaid to fix a bad design, imo.
[doublepost=1525103120][/doublepost]
the $1000 tag is not much for an average Indian
What part of India are you from that $1000 phone is the norm?
 

d5aqoëp

macrumors 65816
Feb 9, 2016
1,067
1,425
iPhone X has been a big Fail in India. Apple still likes to promote SE even today. Apple needs to sell iPhone not more than $700 (₹50,000) because anything higher is out of reach for worki g middle class. Even if they take EMI, there is no satisfaction in buying a $1400 iPhone in India. I mean seriously who in their right minds will buy a damn phone for $1400 ? I hope Apple gets it and prices their next iPhones at half the price.
 

GrumpyMom

macrumors G3
Sep 11, 2014
8,490
11,821
I wonder also if the people in India and China have all switched over to Bluetooth earbuds and headphones. I know it was a pain in the tail living the dongle life while transitioning to bluetooth headphones and ear buds. I now have all of that bluetooth stuff and still prefer wired sound in a lot of situations. It was definitely another expense.
 

JPack

macrumors 603
Mar 27, 2017
5,080
7,509
The average Indian cannot afford an iPhone regardless of the taxes. There's a reason why the iPhone SE is the best selling iPhone in India. If you look at all smartphones sold in India, devices from Xiaomi and Oppo dominate sales. India's consumers can barely afford the basic necessities much less $799 or $999 smartphones.

For China, consumers can afford premium smartphones but the demand has quickly shifted to domestic brands like Huawei. The Huawei Mate 10 and P20 sell for $800 and offer what consumers want: 6" OLED, 4,000 mAh batteries, and dual-SIM.

Apple is responding with the 6.1" dual-SIM iPhone but it's clearly a knee-jerk reaction than something planned.
 
  • Like
Reactions: Wide opeN and 69650

Ramchi

macrumors 6502a
Dec 13, 2007
846
392
India
A large part of that is due to the customs duty imposed by the Indian government. I don't know if you are Indian or not, if you are, then you should be calling your local lawmaker and demanding that the government remove all customs duties. That will make the price of imported products on par with the West, minus shipping.
Law makers make the point correct by taxing(Apple going to shell out more tax in EU in Ireland tax evasion case)! If you don't tax imports, eventually your currency gets devalued and you will pay heavily and government gets nothing.

How Samsung was able to make it work?

Most of the Samsung flagship products are cheaper than global markets. If Samsung can manage, then Apple should be able to!

Recently, contemplated buying iPhone X vs Others....After analysing all options went ahead with S9+ 128 which seems to be reasonable value for money than X or even iPhone 8 Plus for the price vs features.

S9 & S9+ flying off the shelves like happy birds!!
[doublepost=1525108827][/doublepost]
In this ever more globalised world, where countries like India and China have huge export driven economies relying on other countries not penalising imports, its a bit hypocritical of them to be strongarming companies to produce locally, or even have to set up joint ventures to sell in the market.
First, you can't exempt tax only for Apple, it's impossible in a vocal democracy like India! Unless Apple is ready to accommodate FIRST family politicians with tons of stock option in Apple(they will even give free ride for Apple!!!


Second, if they do so, then all importers would exhaust USD purchase by devaluing local currency, which eventually will push the prices of Apple products or any imported products.

Current Government doing the best to control the situation, Apple needs to work with the Government like Samsung,LG etc...btw, Sony still way behind exactly due to this reason with high price, perceived low value for money!
 
Last edited:
  • Like
Reactions: VARDHANN

69650

Suspended
Mar 23, 2006
3,367
1,861
England
SuperCycle was invented by analysts to pump the stock. Don’t believe a $1000+ iPhone will ever be mainstream.
 

Falhófnir

macrumors 68040
Aug 19, 2017
3,950
4,335
Well India has a very underdeveloped middle class currently and a pretty hostile set of policies for international companies doing business there, it’s not surprising handsets costing several hundred USD aren’t selling well there, many people are living at a totally different scale of economy than Apple is working at (living off of $ per day, not with $$$ per month going spare). In terms of China, there are hoops to jump through, though it’s not quite as hostile, and the middle class has become much more developed - that is probably the more worrying thing for Apple. Trump’s rhetoric probably won’t be helping on that front though...
 

Ramchi

macrumors 6502a
Dec 13, 2007
846
392
India
Well India has a very underdeveloped middle class currently and a pretty hostile set of policies for international companies doing business there, it’s not surprising handsets costing several hundred USD aren’t selling well there, many people are living at a totally different scale of economy than Apple is working at (living off of $ per day, not with $$$ per month going spare). In terms of China, there are hoops to jump through, though it’s not quite as hostile, and the middle class has become much more developed - that is probably the more worrying thing for Apple. Trump’s rhetoric probably won’t be helping on that front though...
That would look soo true if the developed country pays $1650 for the mobile while the underdeveloped country pays $500 for the same mobile !!! But the truth is that the consumers in the developed country pay $1000 while consumers in the under developed country pay $1650.

All along from the time Apple invented it's mobile, they remained excessively priced in the underdeveloped country ( until last year apparently Apple dominated premium segment) than its prices in the developed countries!

But all those same number of years Samsung and LG had kept their prices well under global market rates!

If we use the yardstick in the post, it looks poor on the developed countries in terms of their ability nto pay for a mobile phone.
 
Last edited:

Falhófnir

macrumors 68040
Aug 19, 2017
3,950
4,335
That would look soo true if the developed country pays $1650 for the mobile while the underdeveloped country pays $500 for the same mobile !!! But the truth is that the consumers in the developed country pays $1000 while consumers in the under developed country pays $1650.

All along from the time Apple invented it's mobile, they remained excessively priced in the underdeveloped country ( until last year apparently Apple dominated premium segment) than its prices in the developed countries!

But all those same number of years Samsung and LG had kept their prices well under global market rates!

If we use the yardstick in the post, it looks poor on the developed countries in terms of their ability nto pay for a mobile phone.
Apple aren’t particularly interested in targeting lower end market segments - if they can scoop a few people up with the SE then that’s one thing, but they won’t be discounting their higher end products down to the level of budget Android devices, it’s just not workable. The difference in pricing is due to exchange rates, which can be very volatile in developing countries - Apple will therefore leave itself a generous cushion against devaluation. FWIW the iPhone X currently costs $1,400 including VAT in the UK - Apple haven’t done us any special favours despite the UK having the highest iPhone usage as a % of phones other than Japan and the US.
 

JRobinsonJr

macrumors 6502a
Aug 20, 2015
635
1,121
Arlington, Texas
Single SIM is the norm in 'Muerica, but in most Asian countries, dual SIM is a must. Apple ain't gonna win any market share in China or India until they release a dual SIM iPhone.
+ we American's *want* dual-sim phones. Their absence is based on market stranglehold by the carriers... and Apple is apparently not big enough (???) to tell them NO.
 
  • Like
Reactions: arkitect and Mousse