Apple executives such as India country head Maneesh Dhir and telecom business chief Sanjay Kaul, realize that the problem with Apple's sales and presence in India is not lack of demand. The Apple iPhone is a device that many want to buy in the country. The problem is with the price of the handset in India. Because there are no subsidized pricing plans, Apple sells its iPhone in India for the full retail price. And unfortunately for Apple, this has kept them effectively priced out of the second largest smartphone market in the world after China.
For the second quarter, Samsung led the way in India with a 36% market share while Apple had just a 2% slice of the pie. Those figures are based on the number of units sold. Replace that with revenue, and because of the higher price of the iPhone in India, Apple's value share worked out to 5% in the quarter. Back in May, we told you how Apple had started to see strong momentum in India by using installment plans. After cutting the price of the Apple iPhone 4 and Apple iPhone 4s in the country, consumers in India were allowed to put down a small amount and pay off the balance over 6 or 12 months. And when Apple chopped an additional 18% off the price of the iPhone 4, the phone was available for essentially no down payment. It all led to a 400% increase in sales of the iPhone in the country. Apple iPad sales grew in the double digits during the same time period.
Now comes the next part of Dhir and Kaul's plan, which is to get the Apple iPhone, Apple iPad and Apple iPod into retailers in small towns. But once again, Apple runs into arch rival Samsung. Where the 16GB Apple iPhone 5 is priced at 45,000 Rupees ($732.60 USD), Samsung and Sony sell Android models for 30,000 Rupees ($488.40 USD) outside of the city. (Apple has yet to introduce the Apple iPhone 5s or Apple iPhone 5c in India) The 50% price difference will make it hard outside the big cities, to ring up iPhone sales.
Apple hopes to open up 100 stand alone stores inside retail locations in the smaller towns. A senior retail chain executive says that the plan might be too ambitious and even with Apple promising margins of 15% to 20% if certain sales targets are met, the small market stores cannot get the numbers that big city stores generate. But Apple cannot afford to bypass these small towns. According to the CEO of one of the country's retail chains, if Apple wants to grow 30% and higher in India annually, it needs to go after these smaller areas.
source: EconomicTimes via GigaOm