Apple’s India Problem & Why They Need To Fix It
India has a population of over 1.3 billion people and is expected to become the most populous country on the planet very soon by overtaking China. The countries GDP one of the fastest-growing in the world, which means that companies that choose to operate within it have the potential to access over 1.3 billion customers. With this possibility, many companies who’ve entered the market have met with much success, including Google and Amazon. However, the exception to this is Apple, which intended to grow revenue in the country to $5 billion a year by 2020. However, this has proven increasingly difficult, made more so due to the global pandemic.
In the last quarter of 2018, Apple reported it sold over 47 million units of its most popular product the iPhone. This makes it one of Apple’s biggest moneymakers and one of the most successful products of all time; however, in India, the iPhone is only accountable for approximately 1% of the smartphone market. They started selling iPhones in India in 2008 over a decade ago, with the iPhone 3G where they partnered with Airtel, but they still have not been able to make a successful dent in capturing market share.
Price is one of the first reasons Apple has struggled to compete in India. Its flagship iPhone at $999 is considered high-priced in westernized markets. It’s even more expensive in India. To ensure tech companies choose India to manufacture their products, the country imposes a tariff of foreign-made smartphones. Due to most iPhones being made in China, the Indian market will have to pay a 20% levy on top of the price of an iPhone. This can lead to the starting price of an iPhone costing over $1,400. Now, Apple has started manufacturing more phones in the country, and the price difference is not that big compared to the USA, but it has left the tech giant to play catch-up.
Price-sensitivity is India is the primary reason why Apple is struggling there. Indians simply look at value when deciding on which product they purchase. The premium smartphone market in India is worth just 5% of the overall smartphone market — with the most popular phones costing less than $200. Samsung and Xiaomi lead the market because they sell phones in both categories and have seen success in the market. Due to the stagnation of sales in the iPhone, Apple chose the strategy of raising prices to combat a decline in revenue, this obviously backfired in the case of India where customers want to get the most out of the price of a product. Apple’s cheapest phone the iPhone SE starts at around $550 in India, and there are so many alternatives with the same price that offer much better features, hence leading the greater price-sensitive market to take their business elsewhere.
Samsung created the M series of their Galaxy phones which were priced competitively to compete with the major players in the Indian market. So why does Apple not create a cheaper phone for that market and other similar markets. Tim Cook claims that the company’s vision is to create the best possible product, not the cheapest. It could also be because they want to protect the premium reputation of the brand.
As we can see here, price is likely the deciding reason why Apple has struggled to gain in the Indian market, though there are other reasons, including a relative lack of brand recognition. The company has no physical brick-and-mortar stores and they do not have an online store. When you attempt to buy something on their website you get sent to the Where To Buy section which lists authorized resellers. In other words, one cannot buy directly from Apple.
One of the ways that Apple gets you to spend with them is their knowledge of their own products and excellent customer service. They can successfully control the customer’s experience with a product and the journey of buying the product. The experience with Apple Specialists in their retail stores can offer customer service, which is almost always exceptional. Specialists are highly knowledgeable about the products that they are using and can always help. When you walk into a store, you go to the product you are interested in. There will be a specialist there that can help you, and when you are ready to buy, you complete your transaction with them, there and then. This leaves the customer extremely satisfied with their experience.
The company also has streamlined the shopping experience with its online store and recently redesigned Apple Support App to allow access 24/7. This ensures the process is the same online and in retail. To summarize, by controlling the customer experience, Apple has been able to enhance its brand. In India, however, the absence of an online or physical presence makes this is not possible. Third-party retailers do not have any incentive to promote Apple products or even keep them fully stocked as compared to better sellers like Samsung and Xiaomi. Apple has struggled to get a physical store approved in India because of regulatory issues although they are working on it and they are building an online store.
Even in the premium market, there are several reasons why a person will not choose iPhone. Many of the most popular much-loved features are not available in the country. Apple Pay is not available in the country, where competitors have mobile payment functionality. Apple Maps is not the best, missing major landmarks in the country and not supporting navigation. Siri has difficulty picking up the Indian accent.
After heavily researching this topic to create this article, what has become clear to me is that Apple, for whatever reason, simply never adapted to the Indian market. Slowly but surely, however, I’m seeing the company beginning to change for the better by manufacturing more products within the country and setting up a base in Hyderabad where they are attempting to significantly improve their services in the country. If Apple really wants a shot at the world’s second largest smartphone market, they are going to have to accelerate these changes.
