Dileep Kumar
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Apple could disrupt the smartphone ecosystem and breach new markets if it could change its mindset and launch a sub$350 (Rs 20,000) phone.
Steve Jobs never considered India to be a market for his products. And two years ago Tim Cook, Job's successor, famously declared that he loved the country but its multi-layered distribution structure added to the cost of getting 'product to market' and in the 'intermediate term, there will be larger opportunities outside India'.
A lot has changed since then. Apple and its distributors have ramped up their sales network in the country, aggressively promoted their products, slashed trade margins, and introduced buyback and cash back schemes, as they woo the affluent Indian consumer. As growth has slowed down in its traditional markets of US and Europe, it has targeted emerging markets like India and China.
The results are there to see. While ipad sales declined globally in the quarter ended June 2014, the company proudly announced on Tuesday that sales for its tablets rose 45% in India. And as iphone sales rose modestly in developed markets, they grew by 55% in the BRIC countries.
In India, Apple has a more than 50% market share in the Rs 40,000 plus smartphone segment, and it is targeting to sell one million iphones in the 12 month period ended September 2014.
But India remains a far smaller market than China, which has emerged as a key growth driver for Apple. The company's China revenues grew by 26% to around $6 billion in the quarter gone by and its iphone sales grew by a staggering 48%, on the back of its tie-up with China Mobile.
Apple does not disclose its revenues for India. According to its regulatory filings with the Indian authorities, its revenues in the country went up by over 200 per cent in FY2012 and by 50% in FY2013 to touch Rs 3000 crore. The growth figures are impressive but the scale is nowhere near that of China
Can Apple grow its India business like the way it has grown China's? The answer is no, unless it abandons its traditional strategy of manufacturing only high-end expensive phones.
India is one of the fastest growing smartphone markets in the world and upto 80 million such devices are expected to be sold this year. But Apple competes only in the Rs 40,000 plus segment, which accounts for only about 2.5-3.5 per cent of the country's total smartphone market. Even if it was to totally wipe out competition and completely dominate this segment, it can corner only a miniscule section of the market. While the iphone maker has identified India as a high-priority market, its upside here is capped by its product mix.
So far Apple has steadfastly refused to manufacture low cost phones. Last year, when there was widespread anticipation that the iphone5c would be priced at $300-400, the company finally launched the model at $550, and Cook stated that Apple was not interested in the 'junk market'.
Apple continues to pin its hopes on newer versions of the iphones as well as its yet to be launched wearable devices. It believes that these launches will reignite growth in the developed markets and protect its high margins. Wanted: A sub- Rs 20,000 phone from Apple for Indian consumers - The Economic Times on Mobile
Steve Jobs never considered India to be a market for his products. And two years ago Tim Cook, Job's successor, famously declared that he loved the country but its multi-layered distribution structure added to the cost of getting 'product to market' and in the 'intermediate term, there will be larger opportunities outside India'.
A lot has changed since then. Apple and its distributors have ramped up their sales network in the country, aggressively promoted their products, slashed trade margins, and introduced buyback and cash back schemes, as they woo the affluent Indian consumer. As growth has slowed down in its traditional markets of US and Europe, it has targeted emerging markets like India and China.
The results are there to see. While ipad sales declined globally in the quarter ended June 2014, the company proudly announced on Tuesday that sales for its tablets rose 45% in India. And as iphone sales rose modestly in developed markets, they grew by 55% in the BRIC countries.
In India, Apple has a more than 50% market share in the Rs 40,000 plus smartphone segment, and it is targeting to sell one million iphones in the 12 month period ended September 2014.
But India remains a far smaller market than China, which has emerged as a key growth driver for Apple. The company's China revenues grew by 26% to around $6 billion in the quarter gone by and its iphone sales grew by a staggering 48%, on the back of its tie-up with China Mobile.
Apple does not disclose its revenues for India. According to its regulatory filings with the Indian authorities, its revenues in the country went up by over 200 per cent in FY2012 and by 50% in FY2013 to touch Rs 3000 crore. The growth figures are impressive but the scale is nowhere near that of China
Can Apple grow its India business like the way it has grown China's? The answer is no, unless it abandons its traditional strategy of manufacturing only high-end expensive phones.
India is one of the fastest growing smartphone markets in the world and upto 80 million such devices are expected to be sold this year. But Apple competes only in the Rs 40,000 plus segment, which accounts for only about 2.5-3.5 per cent of the country's total smartphone market. Even if it was to totally wipe out competition and completely dominate this segment, it can corner only a miniscule section of the market. While the iphone maker has identified India as a high-priority market, its upside here is capped by its product mix.
So far Apple has steadfastly refused to manufacture low cost phones. Last year, when there was widespread anticipation that the iphone5c would be priced at $300-400, the company finally launched the model at $550, and Cook stated that Apple was not interested in the 'junk market'.
Apple continues to pin its hopes on newer versions of the iphones as well as its yet to be launched wearable devices. It believes that these launches will reignite growth in the developed markets and protect its high margins. Wanted: A sub- Rs 20,000 phone from Apple for Indian consumers - The Economic Times on Mobile
