Apple plans to scale up presence in India

The Economic Times of India (emphasis mine):

The US and China were the only countries that accounted for more than 10% of Apple’s net sales in 2012 and 2011. Apple CEO Tim Cook had time and again said China is where Apple would see future growth, and famously said last year that while he loved India, the country had much less business potential. This is in stark contrast to Samsung, which has identified India as a key market for its smartphone business.

But the growing popularity of iPhones in India has made the US consumer technology company re-assess the Indian market. Its share of smartphones shipped to India, measured in value terms, rose to 15.6% in October-December from 3.9% in the preceding quarter. This growth was led by a few strategic initiatives undertaken by the company. In November, Apple moved away from its global model of selling phones bundled with talktime only through mobile operators in India. It appointed retail distributors and started selling iPhones directly to consumers, who in turn could opt for any GSM operator.

“Earlier, most of us would do iPhone sales of Rs 30-40 lakh a month [$55,000-74,000 USD]. Now each store does monthly business of Rs 2 crore [$367,800 USD]. Apple has sold more iPhones in India since November than they did in the last four years,” said the owner of an Apple premium reseller.

But experts feel it will be a tall order for Apple to catch up or even come near Samsung, the smartphone market leader in India and across the world. The Korean company’s market share, measured in value of smartphones shipped to India, stands at over 38%. It has built a strong distribution network with over 500 exclusive smartphone and tablet stores, christened as Samsung Smartphone Cafes, as well as another 350 Samsung Plazas where it sells its entire product portfolio.

Three thoughts:

  1. For a company that is facing real saturation questions, so cavalierly dismissing the second-most populous country, no matter the practical difficulties, seems like a mistake. It’s good to see it being rectified.

  2. These stores are built by resellers, and is a similar model to that used in Taiwan (where I lived for six years). If the experience is similar – and I expect it is given Apple’s involvement – then it is much closer to an authentic Apple experience than you might expect. Genius bar, fully usable PCs, white oak tables, the whole nine yards.

  3. Apple has consistently tried to force the U.S. carrier model onto carriers around the world. No surprise – that value chain significantly favors Apple by hiding the true cost of iPhones from customers. But India is accustomed to the rest-of-world value chain, which separates the handset and carrier markets. Apple finally adapted, and saw an increase in sales of 565%!

Value chains matter.

More on Apple and the mobile value chain soon.