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Why isn't Apple interested in India?

Aditya Kulkarni
6th Oct 2012
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Apple, the world's largest technology company and the maker of some of the most popular gadgets on the planet, doesn't seem to be very big on the Indian market. India, with it's 900-million odd subscribers, is the world's second-largest market after China, but Apple has very little in the way of retail presence here. Apple has a huge market-share in the US and in most western markets, but when it comes to emerging markets like India, Apple is nowhere to be found. Apple's phones have a market-share of 1.2% in India, according to a recent report from IDC. Despite the low market-share and the presumed potential of the market in India, Apple doesn't seem to be making any effort to market its devices in the Indian market.

Apple has 390 stores worldwide, including 5 in China, but 0 in India. Even it's distribution channels are few and far between. Apple devices are very expensive in India, especially compared to equivalents from Samsung and the other handset manufacturers. New phones are launched very late in India (Samsung, on the other hand, launched the Galaxy S III in India at about the same time as the global launch). Worse still, the Indian cellphone operators don't seem to be interested in pushing the iPhones either. Samsung and HTC advertise extensively in India, but Apple doesn't spend a rupee.

What gives? Why doesn't Apple seem to be at all interested in the Indian market? Apple seems to be happy with whatever little it is selling in India with no effort.

The first thing that comes to mind is that Apple is worried about intellectual property or it doesn't want to sell "unlocked" phones, for worries that they may get pirated. But this isn't true, because Apple sells unlocked phones in China, and the loose IP regime in China doesn't seem to worry Apple too much. Also, the iPhone is made mostly in China, so the IP argument doesn't really hold either.

Then what is it? Why doesn't Apple make any effort to show that it is the least bit interested in India?

When asked about it, Tim Cook said, “You know of course I love India, but I believe that Apple has some higher potential in the intermediate term in some other countries,” during an analysts call on July 24. “We have a business there, that business is growing, but the sort of the multilayer distribution there really adds to the cost of getting products to market,”

That explanation is somewhat weak, because Samsung and Nokia and HTC and every other manufacturer is playing in the same conditions and they seem to be doing quite well, even with high-end phones. While it is true that there is a multi-layered distribution in India, there's really nothing stopping Apple from opening Apple stores, which it operates all around the world. And with the FDI limit in single-brand retail at 100% now, the control-freak Apple has nothing stopping it from owning and operating its own stores now. Besides, Samsung seems to be quite comfortable selling their Galaxy phones through distributors and through Samsung-branded stores. It has payed off for Samsung, which now has a 51% market-share in India according to the same IDC survey.

One explanation is that Apple doesn't need to market in India, and it is just happy with whatever little it is selling in India (with no effort). Its products have such a strong appeal that Apple doesn't need to pay attention to the market, and it will just take off anyway. Does Apple believe that Steve Job's reality distortion field extends all the way into the Indian market? Incidentally, it's been exactly a year today that Steve Jobs died, but Apple's strategy towards India - with or without Steve Jobs - hasn't changed at all.

Another reason could be that Apple doesn't want to be associated with India. India (and other "emerging markets") don't quite fit in with the "premium" positioning of the Apple brand. Samsung has phones from INR 5000 to INR 36,000 in the Indian market, while Apple's iPhone 4S costs around INR 36,000. The iPhone 5 isn't even available officially in India yet, and Apple seems to be unwilling to reduce it's pricing or margins and is also unwilling to give more leeway to the distribution partners at all. Cleverly, Samsung has exploited this situation to capture huge market-share. According to Google, India is likely to add 200 million internet users in the next 2 years, a big chunk of whom will come from Smartphones. The Smartphone market size in India is set to be 19 million units this year, growing rapidly in the next couple of years, and Samsung has a huge chunk of that market.

In any case, I don't think this is a good strategy for Apple in the long run. The Indian market is very big by volumes, and even if it doesn't have a big market for expensive smartphones right now, it will in a couple of years. By conceding this market to the likes of Samsung and HTC, is Apple making a big mistake? Can Apple continue to ignore the market like this? Does Apple even need the Indian market?

What do you think?

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