Apple’s profits are down. Chief Executive Officer Tim Cook hopes that after 25 years in the huge Indian market, the tech giant can make enough profit to boost its profits.
Apple’s market share has remained at the bottom of the figures (now 3. 7%) because its competition offers Indian consumers an excellent price proposition: better apps, longer battery life and excellent after-sales service at a much lower price.
Apple’s fortunes in India have improved. The company’s profits in India rose nearly 50% to $6 billion, according to Bloomberg.
Still, Apple still faces many demanding situations to gain a percentage of the Indian market. That’s because it tried to forcibly adapt its U. S. iPhone business strategy. According to Apple in China and India, a case I co-authored in July 2019.
This strategy created a disconnect between what Indian consumers expected and what Apple offered. Here’s where the venture failed:
Over the past four years, Apple has made significant strides, but it still has to do enough to triumph over its competitive disadvantages. Until it does, India will not provide enough profit for the company to achieve the average annual expansion of about 16. % enjoyed between 2011 and 2021.
The Indian smartphone market is huge, but due to emerging smartphone prices, the number of new purchases is shrinking and expansion rates are shifting from double-digit rates to single-digit rates.
How slow is India? With 650 million smartphone users, it is China’s largest market right now. However, the expansion of the cellular web has stalled. As of last October, India had 790 million wireless broadband subscribers, just 1 million more than in 2021, according to the BBC. The number of new smartphones sold fell 10% to 151 million after a “meteoric double-digit expansion” between 2016 and 2020.
The price is the most used by Indian consumers on a smartphone. As costs rose, demand fell.
By 2022, the average value of smartphones increased by 47% to $269, while 80% of smartphones in India sell for less than $245, according to market research from IDC. Until 2020, Indian consumers bought a new smartphone every 14 to 16 months. By 2023, that figure had risen to about 22 months, IDC said.
With so many Indian citizens living in poverty and vendors not adapting to the demands of the Indian market (e. g. maximum apps and they are in English, inhibiting web adoption in rural India), smartphone manufacturers want to rethink their products, the BBC reported.
Apple is far from its rivals in the Indian smartphone market. According to Bank My Cell, in the first quarter of 2023, Apple ranked seventh with about 3. 7% of the market, down 0. 2% from last year. Xiaomi (24. 9%). Vivo (16. 5%) and Samsung (15. 4%) lead the pack.
Here are some of Apple’s biggest opportunities for improvement.
Apple’s costs are much higher than average (less than $250) and even higher than those charged by its rivals.
For example, in 2018, Apple’s cheapest phone in India, the iPhone 7, sold for $550. That’s more than double the less than $200 that Chinese rivals, adding OnePlus, Xiaomi, Oppo and Vivo, have charged customers.
In 2019, Apple to avoid competing on overall prices and concentrate on the high-end segment of the Indian market, selling its iPhone X at $1,450 and the iPhone 9 at $1,040.
The value of Apple’s iPhone in India is still between 1. 2 and six times higher than the average value of a smartphone in the country. For example, on April 25, its high-end iPhone 14 Pro Max costs $1,562 while one of its cheapest versions, the 16GB iPhone 5S costs $308, according to Mysmartworth.
Apple, unlike a Chinese competitor, has adapted its iPhone to the requirements of the Indian market for longer battery life. But Apple has taken a step forward in this area.
Shenzhen-based OnePlus found that a long-lasting battery was vital for Indian consumers after conducting extensive market research there. The improved battery functionality was due to long trips with limited access to power outlets.
In 2019, OnePlus’ product featured longer battery life, which helped the company protect 30% of the high-end market segment in India compared to Apple’s 25%.
Since then, Apple has brought models with battery life. The OnePlus 11 and iPhone 14 “can last a full day for thirteen to 14 hours with more than 20% power to spare,” according to XDA Developers.
Apple’s core services, such as Apple Maps and Siri, don’t work well in India.
Although Indian consumers said they thought Apple introduced the country’s most productive music streaming service, the Indian edition of Apple Maps provided “scant knowledge of maps about towns and cities, lacked landmarks and lacked detailed directions,” according to the BBC.
Meanwhile, Siri, Apple’s AI-powered virtual assistant, “didn’t speak many Indian words and struggled with Indian accents,” the BBC noted.
If that wasn’t enough, a February 2019 survey of Indian consumers revealed their low opinion of Apple’s after-sales service. A RedQuanta survey of 550 consumers at 80 legal service centers found that consumers were less willing to present Apple products and than competing Samsung and Xiaomi smartphones.
Apple’s lousy score of -22, one of the lowest recorded by analysts and well below zero, above which the service was considered good. challenges, with 60% of respondents calling legal store workers arrogant, according to RedQuanta.
Since Apple didn’t have its own outlets in India, it had to work with legal service providers who didn’t adhere to Apple’s after-sales policies. Some service providers allegedly failed to comply with warranty situations and set their own costs through false claims. that the appliances were damaged.
Customers have complained about long response times for undeniable battery replacement, which one repair shop blamed on Apple’s requirement that third-party retail outlets order portions directly.
To be fair, Apple had opted in the past not to marry an Indian company that operates retail stores. Since 2018, Indian law has prevented foreign companies from operating monobrand stores. Instead, they had to partner. In 2020, Apple won an exemption from this requirement, according to the new economy.
Obviously, there are opportunities for Apple to provide greater visitor service to Indian consumers by opening its own stores.
Finally, Apple’s rivals devoted themselves a lot to marketing in India.
Market leader Xiaomi introduced phones that consumers were almost as smart as Apple’s at a much lower price. Xiaomi saved prices through 100% online promotion and passed them on to consumers in the form of lower prices. Meanwhile, it partnered with Flipkart to create a Buy Fever for its new products: promoting its Redmi Note 8 15 minutes after a flash sale began in 2019.
Apple’s marketing strategy in India doesn’t work as well as Xiaomi’s. According to Indian marketer Debidatta Satapathyis, Apple spends heavily on print advertising and billboards for ads like “Group FaceTime on iPhone” and others. Satapathyis argues that Apple deserves to think when tailoring its classified ads to the Indian market.
It hurts Apple that Xiaomi’s service is ranked as the most productive in India. A 2021 survey of more than 8,000 participants via Red Quanta found that Xiaomi smartphone users are 85% satisfied with after-sales service, beating OnePlus, Apple and Samsung.
Since 2019, Apple has made great strides in moving iPhone production from China to India. As a result, Apple is enjoying an increase in iPhone sales in India and has just opened two Apple Stores there. One analyst expects Apple’s earnings in India to succeed. by $20 billion through 2025.
India is making a big push to manufacture smartphones. In the year ending March 2023, India exported $11. 2 billion worth of smartphones. Apple, with between $5 billion and $5. 5 billion in Indian exports, accounted for about a portion of the total. Rival Samsung sent another $4 billion, according to TechCrunch.
Due to Covid-19 restrictions and other factors, Apple is taking competitive steps to rely on production in China. To that end, in 2022, Foxconn “began production of the iPhone 14 in India, marking the first time the country has assembled Apple’s newest one. “JPMorgan wrote that Apple plans to produce 25% of all iPhones in India by 2025.
Apple, which opened its first two retail outlets in Mumbai and Delhi, India, from April 18 to 20, is experiencing significant sales expansion in India. Anonymous resources told Bloomberg that Apple’s sales in India rose 46% to $6 billion in the year ended in March. 2023.
During the pandemic, Apple’s sales in India surged, with consumers buying iPhones, iPads and MacBooks for work and watching from home. IDC analyst Navkendar Singh told Bloomberg: “Apple’s sales in India are driven by iPhones and wearables, but beyond two years, its MacBook business has also started to gain momentum. “
Apple’s new outlets in India can help the quality of its visitor service, making it easier for consumers in those cities to return products and complete repairs.
Wedbush Securities expects Apple to generate $20 billion in Indian profits through 2025, highlighting its “concerted effort to penetrate the Indian market. “
Meanwhile, Counterpoint Research predicts that Apple’s smartphone market share will be 5% successful by 2023. By making iPhones and other devices in India, Apple can “avoid some import tasks [India required Apple to pay a 20% tax to import iPhones from China] and encourage smartphone sales,” the Wall Street Journal wrote.
Apple is expected to have a 4% decline in profit to $93. 3 billion for the quarter ending March 2023.
Given that China accounted for $74. 2 billion, 19% of its $394 billion in profits in 2022, Apple will want to bring in more than $20 billion from India to make up for China’s declining profits.
To achieve this, Apple wants its pricing, apps, marketing and visitor support to get a percentage of Xiaomi and its other rivals in India.