Apple and the Indian Smartphone market

With more than 1.2 billion people, India may be a very important market for Apple even more than China, to increase its global foothold for a variety of reasons. The biggest one of those reasons is that the Indian government and the market are much more open than China. Let me explain. Apple has had issues with China from day one, with its government in almost a cold cyber war with the US, has been against Apple and has been trying to squash Apple popularity by undermining its products (here is the most recent of this nonsense). It clearly looks like the government there will go to any lengths to favor Chinese companies over Apple, however bad these companies are (case in point Xiaomi). India however has always been open and though it rampant with corruption, the government's attitude towards foreign investment has been welcoming. So for Apple it should be much more easier to deal with its business in India than in China. 

Another key point in this comparison, is how well India braces English as an official language. Though India has high illiteracy rates, many more people in India can speak and understand English much better than people in China. This stems from the fact that most of the education in India is through English, unlike in China. How does this help Apple? Remember how tight the integration of Chinese language in the iOS is? It doesn't have to be the case for iOS in India. In fact you cannot even integrate an "Indian" language tightly as there are more than 60,000 dialects spoken in India and most people are well versed in English more than their Indian mother tongues. Of course just like China specific services like custom search engines (Baidu) for iOS users in China, Apple might have to do something similar in India. But it will just be on the service front. 

Another thing is the fast growing middle class in India. Indian economy has been doing steadily well and the number of tech savvy new gen youngsters is increasing at a rapid pace. The quality of living is getting better every day and technology industry in India is flourishing. All this has resulted in the customer's buying power go up drastically. Increasing tech savvy customers with stronger buying power; what else does a company that sells high end consumer devices need?

You flaunt an iPhone (in India), but you don’t flaunt an Android (phone)
— via Bloomberg

Having grown up in India, I can say one thing about Indians. We care a lot about what others think of us. I guess everyone of us is like that, but believe me for most of the Indians the Society's perception of an individual is really important. And iPhones and Apple devices in general from day one have been status symbols in India, more so than rest of the world. Refer to this article on Bloomberg talks about how Indians perceive the iPhone.

The iPhone 5S in India costs almost $850 in equivalent Indian Rupees (Source: Airtel.com)

The iPhone 5S in India costs almost $850 in equivalent Indian Rupees (Source: Airtel.com)

There are certain points in tis article I agree upon. Like how iPhones (the latest models) are too expensive, an iPhone 5S now can you cost you around $850 equivalent in Indian Rupees. In US, you can get an iPhone for free with subsidies (as iPhone 6 is very close to being announced) and even without subsidies, it is much cheaper in US than in India. That is the reason why Apple continues to sell the older, much smaller capacity models of the iPhone in India (like the 8GB iPhone 5C). This way the price of the iPhone is more affordable in India. But this is only a temporary solution, though sales improved significantly after a more determined push from Apple in the Indian subcontinent using this strategy. This way iPhones will always lack behind the competition, not in terms of quality but purely in terms of features, and companies like Samsung and Xiaomi can easily use their Marketing trickery to convince people that they are paying pretty much the same money for a more than a few years old iPhone models. Also with more drastic changes to iOS, many of these models will soon become obsolete, in terms of not being able to upgrade to the latest iOS and this is bad news for both the customers and for Apple. 

Apple does not have its own retail stores in India relies on its authorized third part retail vendors for selling its products in India (Source: Apple.com/in/)

Apple does not have its own retail stores in India relies on its authorized third part retail vendors for selling its products in India (Source: Apple.com/in/)

The biggest thing I don't agree on with this article is that Apple should be worried of Xiaomi as a potential competitor. No way... If history has taught us anything, anyone who is interested in an Apple product will not settle for a cheap knock off like Xiaomi's phones. They might postpone their purchase of the iPhones till Apple reduces the prices or till they can afford an iPhone or worse case they will just buy an older iPhone. Or in other words, Apple doesn't not cater to the customers that companies like Xiaomi can influence with their cheap knock offs. There is enough room in the Indian smartphone market for Apple to dominate the premium smartphone segment like it does in many countries around the world and let other companies like Xiaomi, MicroMax and Samsung fight it over for the lower end of the market. The number of potential customers who can afford an iPhone in India could be easily more than the entire US population and even if Apple can sell its iPhones to a fraction of thee people it amounts to a huge sales number. 

There is enough room in the Indian smartphone market for Apple to dominate the premium smartphone segment like it does in many countries around the world and let other companies like Xiaomi, MicroMax and Samsung fight it over for the lower end of the market.

Having said all this, it is not going to be easy for Apple to increase their presence and more importantly sales in India. They have also not had a good past relationship with the country as is evident with the lack of retail stores in India (Apple relies on its authorized third part retail vendors for selling its products in India). Also, though Apple does not and will not sell a "cheap" iPhone, it certainly has to expand the offerings of its most profitable product, the iPhone, like it is doing with its Macs and even the iPads (the iPad Mini's lowest end model is almost half the price of the iPad Air). A $100 subsidy for a plastic version of its best iPhone model will not cut it out for developing markets like India. Apple needs to come up with lower cost iPhones, not at the super cheap price points of sub $200 (without subsidy), but at least more in the $400 range (without subsidy), to increase sales in India. Apple has proven multiple times, that it is more smarter than most of us when it comes to running itself and as usual with Apple, I am sure these things are in the pipeline, it is not a matter of if, but more a matter of when?