These days, no matter where I turn, I see an Apple product. 7 out of 10 people in my co-working establishment work on a MacBook, the remaining 3 are being bullied by the others to buy a MacBook! As for iPhones, it’s hard for me to walk a couple of yards without a pretty young thing flaunting a pink iPhone 6S in a ghastly Swarovski studded case. Or uncles pulling out the massive 6Plus phablet from their front pockets.
From where I stand, it appears that the half-chewn fruit is establishing dominion over the planet. So imagine my surprise when I find out that Apple is, in fact, lagging behind in India!
Buck Up, Apple, Buck Up!
Strategy Analytics released a report that shows how Apple has been taking a vicious beating in the market. Last year, iOS devices held only 4.5% of the smartphone market in India. This year, it’s slipped down even further to 2.4%! This is worrisome, to put it mildly.
Google’s Android, on the other hand, is merrily skipping forward. From an unchallenged 90% in 2015, it has crowned itself the undisputed leader this year by hogging 97% of the market share!
On his recent visit to India, Tim Cook speculated that iPhones weren’t selling here because of zero LTE penetration. Sorry, Mr. Cook, you’ve got your facts wrong.
It’s true that LTE is not widely available in the market right now, but it’s only a matter of time before the technology becomes mainstream. People have already started preparing for the future, and 2 out of 3 phones being sold this year are LTE enabled.
The perfect example of this is is Jio. Its new smartphone brand Lyf has already made it to the top 5 best selling phones in the country.
“Jio with its massive LTE network and scale could be the key player to watch out for as it has already become the second largest LTE phone supplier during the quarter,” said Tarun Pathak, senior analyst at Counterpoint.
So, Mr. Cook, you lame explanation just fell flat on its face. Now, shall we examine the real reasons why Apple is losing out on the numbers game in India?
- Sky High Prices
The instinct to blame Apple’s poor performance on their premium price tag is automatically coded in all of us. An iPhone for 65k? A laptop for 85k? An iMac for 1.5 lacs? If that isn’t a deterrent for buyers, what is?
In India, the average selling price for an iPhone is more than $600. These high costs aren’t just because Apple is greedy to make huge profits (although, let’s face it, they are). They have to pay higher taxes to the Indian government because they don’t source 30% of their components from within the country. Of course Apple has to compensate for this chunk that’s missing from their profit pie. And we end up at the receiving end of a double whammy!
- Apple Who?
Yep, that’s what a lot of people all over India would say if they were asked about Apple, the company!
Surprising as this might sound, Apple’s brand awareness is dismally low in this country. It ranks 10th, hobbling behind the likes of Sony, Samsung, Blackberry, and even some local brands. A survey done by Morgan Stanley reveals that nearly 50% of its respondents didn’t know of Apple.
Can you imagine that? There’s an entire world out there, in our own country, that hasn’t even heard of Apple, much less had the opportunity of holding an iPhone in their hands.
It goes without saying then, that Apple has to significantly ramp up its presence in the country. It has to make a concerted effort to reach out to tier 2 and tier 3 cities and make a name for itself locally.
III. Less Value for Money
In a recent interview with Tim Cook, NDTV’s Vikram Chandra raised an extremely valid point while discussing the future of Apple in India –
How does it work if you are selling the same phone with LESS functionality than in the US, at a higher dollar price than in the US, in a country that has much lower purchasing power than the US?
- Apple News
- Some features of Siri – make bookings, check the score
- Home Kit
- Apple Pay
- The Paisa Wasool Indian
Bargaining is a time honored tradition passed down the generations in India. This is a country where no vegetable shopping expedition is complete until we bring away green chillies and coriander leaves for free. We wage a Holy war on the autorickshaw driver for 10 rupees and are willing to spend 1000 bucks on things we don’t really want, just to get that 30% discount. A day not spent squeezing the absolute worth out of every paisa is a day spent in vain.
In a country like this, how do you hope to sell a $600 iPhone when some Samsung handsets retails for less than $200? And there are plenty of Chinese brands that are selling fully loaded phones for less than $80.
It will take a whole lot of persuasion and some amount of sorcery to convince the average consumer to buy an iPhone that’s 7-8 times more expensive but offers very little in terms of value.
- Low Buying Power
India is a price sensitive market. We know it, you know it, the entire world knows it. We milk the money we have for all it is worth, but that’s only because we don’t have too much of it. Sure, all it glitz and glamour in metropolitan cities, where the show of wealth and money borders on the shameless. But the story for the rest of India is very, very different.
According to the World Bank, our average income per annum is under $1,600. Wages are substantially lower here as compared to the rest of the world and a large part of the country has to survive on less than 300 rupees a day. What option are they left with but to buy cheaper phones? Unless Apple comes up with $100 phones and $400 laptops!
The bottom line is India is on its way to becoming the second largest smartphone market in the world. However, it is not a rich country by any means and our buying power prohibits even the tiniest bit of extravagance.
Apple, on the other hand, is an aspirational brand. Most of its products symbolize wealth and standing in society. Unfortunately, only 6% of the population can afford to buy such high end gadgets. For the rest, the Apple price tag is an insurmountable hurdle.
Unless the country becomes wealthier, Apple will have to make do with whatever market share it is able to scrape through. Or, they have to bring the prices down and make them more consumer friendly.
Steve Jobs once said, “Apple doesn’t make overpriced products. We simply don’t make cheap ones”. (Tell us something we don’t know!)
Apple has to decide whether it wants to be a premium product or capture the masses. It cannot do both. A Jaguar or a Bentley cannot expect to be in every home and neither should iPhone.
Varun is the Editor-in-Chief & Digital Strategist at Applesutra. When he isn’t busy devouring Apple blogs & podcasts, Varun spends his time following tennis (Vamos Rafa!), watching movies (superhero or super scary) or reading books (Audible/Kindle/old school).