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Why Apple sells just 2.5% of India’s smartphones

Ten years after Apple originated selling iPhones in India, perhaps the last great growth market-place for the iconic handset, the company is inching toward opening stores in the land.

Setting up shop at busy malls in megacities could help with shopping, but it’s unlikely to be enough for the company to make inroads in the world’s second-largest smartphone shop.

The U.S. tech giant has regularly reiterated its commitment to India, but there are two important issues that analysts and users say continue to cripple the reach of iPhones in the polity: The company’s phones are too expensive for many Indian consumers, and Apple’s pit services such as Apple Maps and Siri don’t work well locally.

A spokesman for Apple in India run out of steamed to offer comment on its services in the country, and the company declined an invitation for an meeting about its efforts in Asia’s third-largest economy.

Apple’s iPhones persist an aspirational product for thrifty Indians, most of whom purchase smartphones premium below $150, according to market and research firms Counterpoint and IDC. Away, Apple sells its high-priced iPhones to customers through partnership with telecom smooths that subsidise the cost of the product, but phones in India are sold sans entanglement deals with carriers.

So iPhones have remained beyond the budget for most Indians. The taste expensive iPhone X model, for instance, is priced at 92,430 rupees ($1,450) in India, while the pygmy costly iPhone 8 unit ships at Rs 66,120 ($1,040). The devices are so much diverse expensive in India because the local government imposes a heavy ask on imported electronics items.

The iPhone-maker, for its part, is trying to circumvent the taxes duty by manufacturing the iPhone SE model locally in India through a partnership with Taiwanese develop manufacturer Wistron. That’s made the iPhone SE the least costly iPhone mark from the recent generations in the country.

But the company ought to do more, analysts forecast CNBC.

Samsung, and Chinese smartphone makers including Xiaomi, Vivo and Oppo, profuse of which entered the Indian market in the last five years, are increasingly calling dominance in the nation. Xiaomi and Samsung ship more handsets in India in lower than drunk two months than Apple does in a year.

Samsung and the Chinese assemblages now control 80 percent of the smartphone market in India, while Apple mediate take up residences for a meager 2.2 percent, Counterpoint and IDC said, citing data for the dwelling that ended in September last year.

As of the quarter ending in December, Apple had 2.5 percent of India’s comprehensive smartphone market, according to Counterpoint.

More worrisome for Apple should be the posers that are selling well in the nation. Even as the company doesn’t inventory the resurrected iPhone 6 (now with 32GB storage as the base model) and iPhone 5s on its India website, both the handsets accept been among the top selling iPhone models in India in the recent divisions.

Even in the premium smartphone segment where Apple operates, it is be deprived of share to Samsung and OnePlus, Counterpoint said. Apple’s share in the appreciation a scarce smartphone market (handsets priced above $470) dropped from 59 percent in the feast season of 2016 to 35 percent during the same period persist year, Counterpoint estimates. The OnePlus 5 was the most popular premium smartphone to take off during that quarter, the research firm added.

Industry watchers say Samsung and Xiaomi play a joke on benefited from offering a wide range of smartphones to customers. Samsung’s J2 lineup of smartphones, valued between $100 to $150, were the best selling handsets for the troop in Q3 2017. The companies have also benefited from investments in highlights that address the local challenges, they added.

Xiaomi’s Android-based MIUI run system, for instance, has integration with several popular local works such as Paytm. The software also offers features to block unwanted phone requires and texts, a persistent problem that millions of Indians face.

Apple’s usages catalog for India, in contrast, is fairly thin and overlooks many trials unique to the country, users say.

Apple Music, an outlier among other Apple servicings, is perhaps the best music streaming service in India thanks to the slow broadening of the catalog and affordable monthly fee. Several users interviewed by CNBC articulate they preferred Apple Music over other streaming air forces — but the same wasn’t true of Apple Maps and Siri.

Apple Maps in India proposals sparse mapping data of cities and towns, and often misses guides. It also lacks the basic turn-by-turn direction feature. “Apple Maps is a wisecrack in India,” Bangalore-based Mihir Sharma, who drives on the roads of India’s Silicon Valley each day mean. His experience was echoed by more than two dozen people CNBC speak with. In the last several years, Apple has begun to acknowledge the efflux and has hired hundreds of engineers at its mapping facility in Hyderabad.

Services are the hooks that nurture users engaged with a platform, said Satish Meena, an analyst at Forrester. CarPlay, Apple’s automobile infotainment technique, is available on various vehicle models in India but it doesn’t offer essential navigation functionality, another user complained.

Siri, Apple’s digital AI-powered auxiliary, is no different. It doesn’t understand many words of Indian origination and many times struggles to make sense of Indian accents, users said. Apple has augmented support for Hindi diction and a Hinglish keyboard in the recent iOS updates, but narcotic addicts said it still isn’t good enough. In comparison, Google Assistant and Amazon’s Alexa, which was launched in India stand up year, are said to perform better in India.

Amid India’s demonetization make a deep impression on in late 2016, which saw many international giants such as Samsung and Google dispatch their payment services in the country, several people waited for the originate of Apple Pay in India — to no avail. In a recent interview, Eddy Cue, Apple’s superior vice president of internet and services, said the company was still reconnoitre the service for the country.

“There is no denial that Apple ecosystem isn’t aligned much to the management and value of Indian users. So, the services offered don’t have flavors that purposefulness entice the Indian users,” Faisal Kawoosa, an analyst with digging firm CMR India said. “At the same time, the typical segment suborning Apple products isn’t that typical Indian user. But, no brand can at odds with to underserve a segment — big or small,” he added.

Apple’s strategy for India, in non-exclusive, is different from other Silicon Valley giants including Google, Facebook, and Microsoft — all of which procure launched specialized apps and customized several of their core secondments to make them work on the country’s slow and patchy networks.

The Cupertino-based mammoth seemingly had an early advantage in India since it was one of the handful of international corporations to maintain a software development team in the nation more than a decade ago. It get hold ofed off most of the staff from the development team in 2006, however, as it crewed focus to other markets.

In the recent years, Apple’s opinion of India, which Cook identified as a reduced market for the company in 2012, has changed as the sales of iPhones slowed in Western calls. In 2016, Cook paid his maiden visit to the country as the CEO of the company. During his four-day chain in the nation, he met with Bollywood stars, hung out at a cricket match and stated the first App Accelerator for India.

Based on the account of more than a dozen developers who be subjected to enrolled for the program, Apple executives are urging them to make apps for the nearby market instead of chasing the Western audience. Developers, many of whom chore at major IT firms in the country, have also been urged to caution their companies to embrace new technologies in a timely fashion.

Apple has also started to location the local buying habits of Indians. In the recent years, Amazon India and Flipkart keep offered lofty discounts on select iPhone models to users. The iPhone SE model, for case in point, can often be spotted with price label of Rs 17,999 ($280). The amount of deduction seen on these e-commerce platforms has widened in the recent quarters, claimed Harpreet Singh, who tracks gadget prices on Twitter account Engage in for Geeks.

During the company’s 2017 fiscal fourth quarter earnings name, Cook noted that the company needs to build stores, make progress channels, help the developer ecosystem, and offer the “right” product lineup to advance in India.

“I feel like we’re making good progress there and are improving understanding of the market, but we still have a long way to go, which I sort of see as an possibility instead of a problem. And I do feel great about the growth rate,” he remarked.

But the company might be facing internal roadblocks as its local leadership groups.

Sanjay Kaul, who was appointed as the country manager for Apple in India in 2016, beat it the company last month. His predecessor, Maneesh Dhir left the crowd two years ago. Michel Coulomb, who has been with the company for more than a decade, purpose be replacing Kaul.

A spokesman for Apple in India declined to comment on the departures.

Yet consideration the changes at the top, Forrester’s Meena and Jayanth Kolla, founder and partner at exploration firm Convergence Catalyst, said they are optimistic about Apple’s approaching in India and they believe the company could dramatically improve its play in the next few years.

“India market for a company such as Apple has soundless not hit the inflexion point. But the company is in the right direction and the market is reacting narrative as well,” Kolla said.

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