How Apple is losing its grip on India, Telecom News, ET Telecom

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Software engineer Samee Alam was able to take the massive leap and purchase an iPhone on this week’s Diwali competition gross sales, however on the final minute he opted for cheaper Chinese competitor OnePlus as an alternative.

Alam, 27, spends hours on his telephone watching exhibits, browsing and procuring, making him the proper goal for Apple Inc because it strives to lift gross sales amongst India’s 1.three billion shoppers.

But in a rustic the place the typical per capita revenue is round $2,000 a yr, even the most affordable of this yr’s new iPhones, the XR at 76,900 rupees ($1,058), prices twice as a lot as most of the alternate options.

Hong Kong-based Counterpoint Research says that iPhone gross sales are falling because of this. From three million telephones in 2017, gross sales could sink to 2 million this yr, in response to their estimate, the primary decline in 4 years.

More than half of these gross sales will come from cheaper older fashions, and the dearth of progress in India was amongst issues cited by Chief Executive Officer Tim Cook when he gave a disappointing vacation outlook final week.

Even within the premium phase, smartphones that price greater than $400, Apple lagged Samsung and China’s OnePlus within the third quarter oneplus-continues-lead-growing-indian-premium-segment-second-successive-quarter.

“I have never used an iPhone and I was keen on getting my hands on one but it didn’t make sense,” says Alam, who works for one of many raft of Companies to have invested within the southern metropolis of Bengaluru, typically referred to as India’s Silicon Valley.

“I look for storage, camera and processor in phones and cheaper alternatives like OnePlus are more value for the money. The new iPhones cost almost 100,000 rupees – I can get three good phones for that price or even a decent gaming laptop.”

Solid Mac gross sales and the excessive unit worth of iPhones meant Apple’s complete income of $2 billion in India final yr was nonetheless double that of OnePlus, which solely sells cell phones. But Counterpoint’s information says that hole can even shrink.

OnePlus’ India head Vikas Agarwal instructed Reuters this week that 10-15 % of latest clients in latest months have been defectors from Apple, suggesting even some loyalists are opting out of upgrading their handsets.

HIGH IMPORT DUTIES

Apple’s issues transcend worth.

The firm, dealing with down a handful of regulatory complications, misplaced a few of its high executives in India firstly of this yr.

An Apple spokesman stated the departures had nothing to do with the corporate’s efficiency, however individuals aware of the matter instructed Reuters that the departures have been probably linked to the corporate altering its distribution system. Apple has minimize the variety of distributors within the nation to 2 from 5.

The sources, who declined to be recognized as a result of they’ve enterprise relationships with Apple, additionally stated firm veteran Michel Columb is nonetheless working on solidifying enterprise relations since taking management of the Indian operation in December.

Apple declined to remark additional.

Prime Minister Narendra Modi’s authorities has sought to drive electronics producers into manufacturing domestically by steadily shifting tariffs up the provision chain from easy telephone instances to stylish chipsets and boards.

Along with native Companies like Lava, international smartphone giants together with Samsung Electronics Co Ltd, Oppo and Xiaomi Corp have responded aggressively, investing tens of millions of {dollars} in crops round Bengaluru and Delhi tech hub Noida.

Apple is the one main participant which doesn’t manufacture telephones within the nation and it solely assembles two low-cost older fashions by means of Wistron Corp in Bengaluru.

Industry consultants say because of this the corporate nonetheless imports about 70-80 % of its telephones. That leads to excessive import duties, which in flip make the telephones costly.

In the United States, the fundamental iPhone XR mannequin prices $749 or roughly 54,400 rupees, solely two thirds of its retail worth in India. Beyond that, whereas U.S. telephones are sponsored underneath offers with wi-fi carriers, Apple’s telephones in India are usually not.

“Apple doesn’t have enough confidence … in the Indian manufacturing system right now, to set up plants and move some of the manufacturing out of China,” stated analyst Navkendar Singh of tech consulting agency IDC.

“In the process they are losing around 15-20 percent of their tax incentive … which they could have passed on to the consumer.”

EMPTY STORES

Diwali, the Festival of Lights, is peak promoting time for electronics in India, however the Apple-licensed retailer in one in all Bengaluru’s huge procuring malls was abandoned this previous Saturday.

“Features of the emerging phones are very similar to an iPhone,” says salesman Aejaz Ahmed, including volumes have fallen prior to now few months. “It is very difficult to make out the difference from a distance because they even look so alike.”

Sales workers at a number of shops in Bengaluru and close by Chennai pointed to the launch this yr of the newest OnePlus telephone as a significant downside for the U.S. phonemaker. At 37,999 rupees, the Chinese firm’s 6T is half the value of the XR.

The outcome, says Neil Shah, from Counterpoint, is that Apple’s person base in India is set to say no about 10 % to 9 million customers this yr. That compares to an estimated 436 million Android customers.

“If your user base is declining, you are losing grip on the market,” he says. “The new customer base is not coming.”

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