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A report from the Wall Street Journal today details Apple’s minuscule success in India with iPhone, specifically highlighting Amit Rajput, who runs a counter selling iPhones in the country with a population of over 1.3 billion. Rajput spoke on how one iPhone sale a day is considered ‘lucky’, with his coworkers at the Samsung, Oppo and Nokia counters selling well over ten devices daily.

The sales decline comes as a stark contrast to 2013, where Rajput recalled selling 80 iPhones per day. He says today, most Indian consumers don’t spend more than $300 on a smartphone — reducing Apple’s presence in the country dramatically.

As smartphone sales in more developed countries throughout North America, Europe and Asia began stagnating over the past three years, Apple along with Samsung and other major brands have looked towards the massive population of potential customers in India to continue global smartphone growth and gain more market share.

While the plan has worked well for brands with more budget-friendly options, Apple’s luxury-only approach hasn’t paid off.

In greater developed markets, Apple has positioned iPhone XR as the ‘budget’ iPhone. For even cheaper options, Apple sells previous generation models at reduced prices. However, it’s clear Apple’s ever-increasing prices are even struggling stateside.

Recently, Apple has taken a rather unprecedented approach of advertising the latest iPhone models at highly discounted prices with an infamous asterisk by the price — reminding you a previous iPhone trade-in is required. They even went as far as advertising discounts in-store — a generally unprecedented move by the company.

As expected, today’s WSJ report details how Apple’s limited product offerings push them into a corner by not providing choices for low-income markets.

At the heart of the issue is Apple’s reluctance to change its traditional business model for selling the iPhone. Rather than make a range of handsets, it has prioritized a limited number of coveted products, sold at high prices—a strategy that revived the company after near bankruptcy in 1997 and helped make it the first U.S. public company to reach a $1 trillion valuation. The iPhone’s margins have been the basis for three-quarters of the company’s gross profit in recent years, analysts say.

The report charts out global iPhone sales, demonstrating stagnation since 2016, further proving any push into Indian markets over the past three years hasn’t resulted in market share improvement.

In the United States, carriers used to sell customers smartphones on two-year service agreements with the advantage being subsidized cost hardware, generally around $199. Now, most distribute the payments of the full device cost over 24 months.

In places such as India or Africa, buyers almost exclusively purchase phones outright, taking greater advantage of pre-paid or pay-as-you-go plans. Thus, it’s much more difficult for $749+ devices to thrive.

In 2015, we reported on Apple lowering iPhone prices in India by 15%. In September of this year, Apple cut prices even further, directly after the announcement of the iPhone XS, XS Max and XR.

It’s clear Apple sees markets such as India, China and Africa as important markets to appeal to, and we saw this with Apple’s inclusion of dual SIM this year. While US users generally stick to a single mobile carrier, customers in China and India frequently swap SIM cards, making dual SIM a near requirement.

Apple went so far as to create a physically different dual SIM model for the Chinese markets, while offering eSIM as the secondary SIM option for the rest of the globe. 9to5Mac recently did a hands-on with a physical dual SIM iPhone XS Max, which you can read about here.

As for Apple’s trouble in India, the report details how an estimated 40 million customers will be new smartphone owners this year alone. However, 95% of smartphones in the country cost less than $500, putting iPhones into the ultra-premium segment.

One of the key factors in holding back premium smartphone sales in the country is the lack of widespread high-speed internet. With 5G so close on the horizon, it seems like the country will skip out on 4G entirely at this point, awaiting the ultra speeds of 5G to light-up the nation, and hopefully soon, the entire globe.

Perhaps most interesting from the report is how it details Apple’s unwillingness to wait for market research, rather opting for boots on the ground research into understanding local consumer habits and defining the most popular features.

Selfie-effects and special camera functionality are major selling points in India, and it might be why Apple pushed the Face ID Animoji effects along with Portrait-mode so heavily.

Apple is still awaiting its first official retail store in the country. However, with the company’s current state of affairs in the country, Apple may not rush to push forward with a retail presence.

Further, the report details why Apple has had such struggles in creating an official retail presence so far.

Apple has also sought to open its first official, company-owned retail store in India, people familiar with the talks said. Such stores have been critical in promoting the brand around the world. But India requires single-brand retailers that are more than 51% foreign-owned to buy at least 30% of their manufacturing materials from Indian vendors—a hurdle that’s hard for Apple to clear given most smartphone components are made elsewhere in Asia.

Government officials felt the company wasn’t focused enough on investing in local production and bringing high-tech jobs to India, according to a person familiar with the matter. Talks stalled. The request for concessions is pending and Apple has been unable to move ahead with a store. Opening its own stores remains Apple executives’ top request in ongoing discussions with policy makers, according to a government official.

Mr. Cook told analysts last month that discussions with the government have been productive.

“I fully expect that, at some point, they will agree to allow us to bring our stores into the country”

Finally, the article notes Apple CEO Tim Cook hasn’t personally visited the nation since his last public visit in 2016.

What do you think about Apple’s troubles in India? Should they make a lower-cost iPhone option exclusive to certain markets, or reduce costs overall? Tell us how you feel in the comments below!


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