With Apple’s ambitious expansion program in China well underway, the company now appears to be seeking to boost its market share in the next growth market, India. CNET reports that Apple has almost halved the price of the iPhone 5s from 44,500 Rupees ($665) to 25,000 Rupees ($370).
The price cut appears to be a move by the Californian company to increase its penetration in India, the world’s third largest smartphone market after China and the USA, where the bulk of phones sold are sub-$300. As of quarter 3 of 2015, Apple is not even among the top 5 smartphone vendors in India, a market that IDC Research predicts will overtake the US by 2017.
Although India is a huge market for smartphones, it is currently quite a different market to China, suggesting that Apple needs a significantly different approach …
China has a large and growing middle-class in urban areas, who can afford premium products. India, in contrast, has a much smaller market for premium products as yet, with the greatest opportunity in the mid-range.
“To drive volume, Apple will need to keep focus on older iPhone generations,” IDC’s Kiranjeet Kaur said
Apple is also hampered by the high import taxes India applies to products not manufactured in the country. Samsung is able to sell its products at more competitive prices thanks to local manufacturing.
It was announced in the summer that Foxconn planned to build 10-12 factories in India by 2020, though it was not known whether production would include iPhones. Tim Cook discussed the possibility of local manufacturing with Indian Prime Minister Narendra Modi in September.
Apple has been working hard to grow sales in India with a large boost to its reseller network, financing plans and cheaper hardware. The company has also been in discussion with the Indian government about relaxing laws which prevent it opening its own retail stores in the country.
The move may also be an attempt to move iPhone 5s inventory ahead of the launch of the iPhone 6c which is rumored for release in Spring.
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Until Apple makes a dual sim compatible iPhone they are going to stay out of the top 5 in India. Maybe this gives credence to the 6c rumors if such a device were more “internationally” marketed with dual sim capabilities.
I don’t think I understand the importance of dual Sim. Wouldn’t Apple sim, where you can just switch mobile carriers on the fly through software, be a better solution? Switching sims is annoying and removing the sim tray and slot would free up internal space and mean the card could be positioned anywhere and not just at an edge of the device.
Embedded sims would free up a lot of space on iPhones and be able to switch operators on the fly without swapping SIM cards. Embedded SIM cards should already be standard on iPhones and iPads. I would not be surprised to see them in the next Apple Watch or the 6c or 7c in the spring.
Apple shouldn’t have to race to the bottom to gain market share in India. Apple needs to keep pounding on nations where the people can legitimately afford iPhones. Indian consumers should be spending their money on things other than iPhones if their earning power is that low. It would be helpful if Apple did have some manufacturing plants in India. I would never imagine people advising Mercedes-Benz to sell cheaper cars simply to improve market share in third-world nations. That’s just stupid. MB builds a high-quality car for people who can afford it. Why should a company lower their standards or lose profits for the sake of market share? What Apple should be doing is finding other ways to make money that doesn’t include iPhones. That’s about the biggest mistake Apple is making. The company can surely afford to find other ways to make revenue. Rival companies are managing to find other ways, so why not Apple? Apple should easily be able to build a competitive cloud services platform even if they need to acquire a company or two.
India is one of the fastest growing emerging economies. It along with the other BRIC countries account for almost half the worlds population. It’s estimated that by 2020 these countries will all be in the top 10 largest economies in the world. It would be stupid for Apple to not appeal to those consumers. In many ways the Iphone is an entry device into the Apple ecosystem. Its just one purchase. Why wouldn’t Apple sell an older product (the 5S) to a nation at a reduced cost when they already invested the capital into producing it and are not making the sales to keep the product in western countries? If you can capitalize on the expenses you’ve already incurred and still dramatically increase revenue -with an almost guaranteed adoption of other apple products…it would be stupid for Apple not to do that.
Didn’t Tim Cook say that they are not racing towards market share?
I I wish they would half the price of iPhones in the uk.
Anyone know if this is an 8GB or 16GB iPhone? Apple had “targeted” Indian consumers before with the 4s, IIRC…by pushing 8GB handsets. Which was just downright stingy to the point of evil.
(Evil (adj)- thinking it is acceptable to saddle poor emerging market consumers with a first-world-known sub-tolerable user experience because of profit-margin extending component choices, rather than fundamentally redesigning/designing products that are more financially viable for their purchasing power. see also “Greedy”)
I’d also appreciate any color that commenters familiar with the dual-SIM thing (@pdoobs, @Shaun Edward) might have to better explain to US readers –WHY– that phenomenon is so popular in India (and other regions, for that matter). In the US I know of users who use dual-sim phones for regular US service while also using a second “pre-paid” SIM for service to Mexico and Central America. Apparently there are several pre-pay (MVNO) services that offer significantly better “international long distance” rates, but with otherwise not so great US calling.
I know dual-sim is also big in Asia. I have extended family in the Philippines, and dual-sim is just a way of life. Yet I have never gotten a clear-cut answer from anyone as to WHY. It seems as much about perception as anything else; the perception that the pre-pay services have better rates.
This is actually because unlike Western countries where plans are generally POST-paid and phones are locked to specific carriers, Indian markets rely more heavily on PRE-paid, or pay as you go, plans. Phones are purchased up front and not locked to a specific carrier. Customers use the dual sim to allow them to utilize multiple carriers for better reception. Again unlike in the USA where there are carriers that blanket the entire country and laws that require them to allow smaller carriers to piggy back on their networks, In India the area is divided into 20 something telecom circles where each operator has to bid for a license to operate in a particular circle. So basically – you may not have service in a particular place without switching over to another carrier.
I guess they are creating space for new iPhone 6C (4″ version)
Most Indian consumers prefer larger screen phones, 4 inch will never help Apple gain any footing.
Selling iphone 5S for $660 is a ripoff. Currently Amazon (USA site) has iphone 5S for $349 with shipping. So it is not really a price cut to save Indian consumers.