This recent news report stated that Apple has found the going tough in the Indian smartphone market. Smartphones offered by RIM and Nokia outsell the iPhone by a ratio of 1:6 and 1:18 respectively. Analysts have offered two reasons for this “anomaly”. First, it is suggested that India lacks the wireless infrastructure to support the main features of the iPhone. Second, analysts claim that the Indian consumer is not mature enough for luxury products like the iPhone. The iPhone is a phone for the classes, not the masses.
Apple accounted for 2.6 per cent of India’s smartphone shipments in the quarter ended June 30, trailing RIM’s 15 per cent, Samsung Electronics Co.’s 21 per cent and Nokia’s 46 per cent, IDC estimates.
While the above points may hold some weight, another major issue seems to be that Apple is not offering enough value to the discerning Indian consumer. Apple wants to charge a premium in the Indian market, but the Apple Experience, that it is so famous for, is missing. Let’s elaborate.
First the price premium. The iPhone 3GS retails at 20,000 rupees. That is around $400 as per the current exchange rate and around $1600 as per rough PPP calculations. Compare this with Android, RIM and Nokia offerings that start at less than half the price.
The cheapest iPhone 4 costs $705 at Reliance’s iStore, while the cheapest iPad 2 sells for about $603. In Apple’s US online store, the iPhone 4 starts at $199 with an AT&T Inc contract and the iPad starts at $499.
BlackBerrys under $200 made up 40 per cent of their shipments in India in the quarter ended June 30, said TZ Wong, an analyst for IDC.
Second, the missing Apple Experience. There are no Apple stores in India. If one wants to buy an iPhone, you buy at full price (with reverse subsidy) from a carrier, or visit an Authorized Reseller (which have many locations) or a Premium Reseller (who have less locations). There is no online store. At a typical showroom of an authorized reseller, the iPhone would be one of around 30 smartphones on display. It would be the most expensive smartphone on display. Some of its accessories would not be available for sale at the same site. And one would need to set up the phone on your own computer. If you don’t have access to a computer, well you may have to take it to another location (a Premium Reseller) to get it set up.
If you decide to take the plunge and buy an iPhone, you still don’t get the full Apple Experience. If you need to get your phone repaired, you will need to take it to a Authorized Service Center. The authorized reseller from whom you purchased it cannot fix it for you. There aren’t many service centers going around – for example, only 5 service centers in Delhi fix an iPhone. That’s about 1 service center per a potential 8 million customers (there are 41 million mobile subscribers in Delhi). Once you get to the Service Center, you will find out that they only repair stuff during a fixed 5 hour window, on weekdays. You cannot call them to fix an appointment, you cannot set one up online. Once your drop off your iPhone, they will give you a time when you can come and pick it up. Till then, you are without a phone.
Oh – and by the way, if you are visiting India and your iPhone needs service – tough luck. They don’t honor the warranty on an iPhone that is not purchased in India.
Compare this with the near magical experience in an Apple store and one might start to understand why the Indian consumer is not sold on the iPhone.
However, the Indian smartphone market presents a great opportunity to Apple. It is the world’s second largest cell phone market with 602 million subscribers and 866 million mobile connections. Smartphones are expected to take off in a big way. And with the advent of the iPhone 4S, coupled with a cheap iPhone 3GS, one can expect Apple to start increasing its share of this high potential market (more on this later!).
Smartphone shipments in India are poised to jump almost eightfold, or an average of 68 per cent a year, to 81.5 million units by 2015, according to IDC.