As recent data suggesting success could be elusive in the near term, Apple’s ambition to make a splash in India’s growing smartphone market appears to be slipping.
Analysis say that Apple now has to contend with the growing popularity of Chinese handset makers in Asia’s third largest economy apart from contending with dethroning market leader Samsung and competing with local players.
According to a report from research firm Canalys released Tuesday, for the fourth quarter of 2016, the Cupertino, California-based company failed to crack the top five, in terms of smartphone market share in India. Four of the five spots behind leader Samsung were occupied by Chinese smartphone brands.
With 28.1 million smartphones shipped, the overall smartphone market grew by 4 percent annually in the October-December quarter. Despite seeing an 11 percent on-year decline in shipments, Samsung dominated with 22 percent of the marketshare.
Falling out of the top five in the final three months of 2016 after the Indian government’s demonetization sparked a cash squeeze were local players Micromax, Intex and Lava, which accounted for nearly 30 percent of the market in the final quarter of 2015.
Customers who typically buy in cash and from independent retailers are targeted by the “local brands”. Rushabh Doshi, an analyst at Canalys, in the report said that these retailers are suffering a slowdown in consumer spending,” with the short-term liquidity crunch caused by demonetization.
“Local vendors are losing out as retailers look to shift their stock to fast-moving, current devices,” he said.
Up from 200,000 handsets in the same period a year earlier Chinese smartphone maker OPPO shipped 2.6 million units in India and saw a massive jump in its marketshare annually.
A key factor underpinning the growth numbers of the Chinese company is its aggressive marketing tactics, Canalys said. Such marketing activities included tapping of Bollywood celebrities to become brand ambassadors and sponsoring popular TV shows and cricket tournaments.
Capturing nearly 36 percent of the market share, the likes of vivo, OPPO, Xiaomi and Lenovo pushed out Indian handset makers from the top five in the fourth quarter, A similar report from Counterpoint Research showed.
Counterpoint Research said the iPhone maker came in 10th in the smartphone rankings for the quarter, although it led market share in the premium segment, even as the Canalys report did not provide numbers on how many smartphones Apple shipped in the fourth quarter of 2016.
An obstacle in Apple’s attempts to expand its presence in India is the iPhone’s high price point, analysts say.
“Apple needs to bring the prices further down in India so that it’s more (affordable) to a greater populace,” Gartner’s research VP, Mark Hung, said.
While $649 in the U.S. is the starting price of iPhone 7, it can climb to as high as $900 in India once import taxes are factored in. According to World Bank data, the average annual income in India is just over $1,500 by clomaprison.
Manufacturing the handsets locally to circumvent India’s import taxes is one way of reducing the price of the iPhone in India, Hung said.
Including asking for a 15-year customs duty holiday on imported iPhone kits as well as capital equipment, a series of concessions on taxes and imports of components to set up an iPhone manufacturing unit in the country were recently discussed between Apple and Indian government officials according to local media reports.
The Economic Times reported earlier that request of waiver of the compulsory 30 percent local sourcing norm to open fully-owned retail outlets by Apple was rejected by the government.
(Adapted from CNBC)