The other giant

Apple’s China dream may be fading, but India remains a fantasy

July 24, 2013
Obsession
Mobile Web
July 24, 2013

Despite cheerful iPhone numbers from Apple, there has been some chatter this morning about the company’s performance in China: Revenue there is down 14% year-on-year, settling in at $4.6 billion for the three months that ended in June.

The rest of the world, meanwhile, seems to be doing pretty well for Apple. CEO Tim Cook reassured analysts in the conference call  yesterday: “India was up over 400%, Turkey and Poland were both up over 60%, Philippines were up about a 140%,” he said.

Growth of 400% in India sounds impressive. It is now the world’s third-largest market for smartphones with plenty of room to grow. Any phone maker would be nuts to not focus its efforts on India.

In the second half of last year, Apple signed deals with new distribution partners in India, released the iPhone 5, and launched an aggressive campaign featuring zero-interest financing. As a a result, sales jumped from about 4% of the smartphone market in the third quarter of 2012 to nearly 16% in the fourth quarter. Yet that cloaks what is actually a lukewarm performance in—it bears repeating—the world’s third-largest smartphone market.

Once the initial enthusiasm wore off, Apple’s sales quickly plummeted, despite a continuing barrage of front-page ads offering financing. They appear to have picked up somewhat in the second quarter, but since Apple doesn’t disclose any India-specific figures, let along break it down by model, it seems reasonable to speculate that the rebound is due to the ever-sweeter deals Apple has been proposing in front-page newspaper ads for the older iPhone 4 and 4S.

Middling sales powered by older models in a market that is brand-conscious and should be all over the iPhone doesn’t sound very promising. Data prices in India are plummeting, with one provider touting “3G speed at 2G rates” and another due to launch dirt-cheap 4G wireless services in the coming months, both of which will drive greater smartphone uptake. Other smartphone manufacturers are better prepared. Television ads in the country are dominated by Sony (featuring celebrity endorsements and a dust-proof phone), Samsung, Nokia, and Micromax (a big local player).

Moreover, domestic firms peddling Android phones are also proliferating, with upstarts such as Celkon springing up to emulate the the success of Micromax and Karbonn. That, admittedly, is the case in many emerging markets. But unlike its push into China, Apple has failed to create a particularly attractive proposition even at the higher-end of market.

With China beginning to mature and India slipping away, Apple may have to do a few things it considers unorthodox. Just as its newspaper ads and financing deals gave sales a big push, highly visible retail outlets, television spots, and a bit of PR couldn’t hurt. If Apple doesn’t move quickly, it may find the top spot already occupied.

Top News

Powered by WordPress.com VIP
Follow

Get every new post delivered to your Inbox.

Join 21,716 other followers