Apple Falls in India: Why Indian iPhone Loyalists Are Turning

The Indian smartphone market is currently bursting with potential, what with Indians spending more and more time on their phones, not just calling or texting, but shopping, networking, and watching movies and shows. Phone manufacturers are queueing up to serve the 1.3 billion consumer base. In these times of phone-prosperity, however, Apple is not able to capture the Indian market.

Price is amongst the chief reasons why Indian consumers are shying away from the world popular iPhones. The average per capita income in India is around USD 2,000 a year, and the cheapest iPhone this year, at a price of INR 76,900 (USD 1,058), turns out to be double of the other choices available in the market.

Figures from Hong Kong-based Counterpoint Research reveal that iPhone sales have fallen from 3 million in 2017 to around 2 million this year. They say this is the first decline in four years. In addition, most of these sales figures are made from older models, which are cheaper and more affordable.

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Even in the premium range of more than USD 400, the third quarter saw Apple left behind by Samsung and China’s OnePlus. Indian consumers, who generally seek good storage, camera, and processor in their smartphones are seeking and finding these options in cheaper alternatives.

Till last year, high unit price of iPhones rendered Apple’s revenue in India at USD 2 billion, twice that of OnePlus. However, Counterpoint’s analysis predicts that this difference will now lessen. At the same time, Apple results for FY2018 for its Indian entity have reported a rise in net profit by 140% touching USD 122.54 million (INR 896 crore). The company has shown a 12% hike in total income to USD 1.79 billion (INR 13,097.64 crore), from USD 1.6 billion (INR 11,704.32 crore) last year.

The Counterpoint report, however, reveals that Apple was in possession of only 2.5% share of the smartphone market in India at the end of December 2017 period, while Samsung and OnePlus are gobbling up its share. According to reports, a good percentage of Apple loyalists are turning their back on iPhones, and going for other brands.

In the Q2 2018 earnings call, Apple CEO Tim Cook had called India the third largest smartphone market in the world, saying the country held large opportunities for Apple in India, while admitting to iPhone’s low share in that market.

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Not only has Apple has cut down its distributors in India from 5 to 2, it is also refraining from giving in to the Indian government’s demand for manufacturing in India. In fact, Apple is the only major smartphone player which is not manufacturing phones in India, while companies like Samsung, Oppo, and Xiaomi have invested highly in plants near Bengaluru and Noida. This has no doubt resulted in high imports, leading to Apple’s inability to lessen their prices.

Meanwhile, Apple is also touted to lose the 5G smartphone race. A report by Fast Company reveals that Apple will be introducing its first 5G iPhone before 2020, while companies like Samsung and others are planning way ahead. The report says Apple’s scheduled launch for its first 5G iPhone is in 2020, in which the tech giant will utilise Intel’s 8161 5G modem chip.

On the other hand, Apple’s competitors have plans to bring out their 5G handsets at the coming Mobile World Congress in February. Android phones from the brands Oppo, Huawei, and Xiaomi will have 5G modem chips made by Qualcomm.

Apple has also had to halt production for its iPhone XR, which debuted with the iPhone XS and top-of-the-line XS Max, since the high-end smartphone did not meet sales expectations. Instead, its iPhone 8 and iPhone 8 Plus, both cheaper smartphones, have seen a spike in orders.