Why is Apple behind Xiaomi and Samsung in India?

Apple is a tech giant, there’s no doubt about it. How does Apple fare in the Indian market? The answer is: “Not good”. The company has a really hard time selling their consumer electronics products in the mentioned region. Apple sold 40.8 million iPhones worldwide in 2019. For Apple, the Indian market has been one of the hardest nuts to crack. The Cupertino-based manufacturer has been selling its products in the region since 2008, but the company can’t seem to get a strong foothold in there. In this article, we cover the reasons behind this marketing phenomenon.

Regional reasons

According to Kiranjeet Kaur, Senior Research Manager for IDC Asia Pacific, “India is a very price-sensitive market, which means that people pay a lot of attention to what value they are getting out of the price that they are getting out of the price they are paying for a particular product.” In the case of Apple, there’s a lot of premium being paid for the brand itself rather than its products, and that’s something that the Indian consumer thinks about if they’re getting a better deal with other brands at a lower price. So for Apple, brand trust loyalty and fidelity is a caveat rather than a strength in the Indian market.

Competitors breathing down their neck

Chinese manufacturer Xiaomi and South Korean consumer electronics manufacturer giant Samsung have been leading the smartphone sales in India for the past two years. These two companies make up nearly 55% of the sales, while Apple is in single digits. The “premium” smartphone market to which Apple sells barely covers less than 5% of the overall market in India.

Most smartphones in India sell for less than $200 USD, and Apple doesn’t have any play in that segment. Samsung adapted to this segment, and the Galaxy M series are a good example. Apple isn’t interested in changing its strategy. Tim Cook says it boldly: “For us, it’s not about making the cheapest. For us, we’re about making the best product that enriches people’s lives. There’s a lot of people in the world to which we sell that we can have a really good business by selling the best.”

Investors think Apple’s strategy is a mistake

Many investors consider that Apple should slash their prices in the Indian subcontinent. Dan Niles, founding partner at Alphaone Capital Partners posts the following argument in an interview with CNBC: “How can you sell a $1000 USD phone in China, where the Gross Domestic Product is $10000 USD? In India, it’s $2000 USD. It’s going to be hard to sell that phone in India.”

Tariffs & Regulations

India’s heavy high import duty on the phones that aren’t manufactured locally. So, for most of the big players in the smartphone market in India, they have to manufacture those phones there so they don’t pay the high tariffs.
Samsung has been making phones in India since 2007 and they opened the largest smartphone factory in the world on the outskirts of New Delhi. Chinese makers like Oppo and Xiaomi have also made big investments in the Indian subcontinent.

Apple can’t open its own stores and sell products exclusively in the region because of Regulatory issues.

Apple isn’t shunning India in its entirety, because they manufacture their low-cost iPhone SE and iPhone 6s models there in partnership with Chinese manufacturer Wistron. Apple might move its production of the iPhone X series into Foxconn’s plant in Southern India. From Tim Cook’s perspective, going from $100 million a year to a $2 billion dollar a year revenue is a good news.

Apple lags in software experience in India

Apple has lagged severely in bringing good software experiences to its users in India, in January they introduced turn-by-turn navigation to Apple Maps in India. Before that, that significant part was missing. There are not many apps that cater to the Indian market. To fix these issues, Apple has hired many people in its facilities in Hyderabad to improve its services. Apple Pay isn’t available in India, while Samsung and Google have payment platforms.

 

 

Alberto Zambrano
32, Millennial from Venezuela with a focus on tech, medicine and geopolitics