Apple India’s five challenges in smartphone market

A recent report in prepared by Sankalp Phartiyal and Aditya Kalra illustrated five challenges faced by Apple in India, the world’s second-biggest smartphone market, to grow the business.
Apple iPhone userFirst, Apple has battled India’s telecom regulator TRAI over a demand that it allow the use of the government’s anti-spam app for almost two years.

Telecom regulator warned last month that non-compliance by Apple could result in iPhones being “derecognized” from the country’s networks.

Second, the Cupertino, California-based company has just 1 percent share in the rapidly growing smartphone market in India. Korean brand Samsung has regained its number one position from China’s Xiaomi in the recent quarter. Apple could not sell its innovative, but costly products, in India.

Third, Apple has not received the tax breaks it has sought for technology suppliers to expand local manufacturing. The strategy of Apple is to avoid steep import duties that have made its iPhones, already pricey for many Indian consumers, even more expensive.

Fourth, local content prerequisites have also stopped the US tech giant from opening its own retail stores. The lack of direct sales channels has helped make it vulnerable to discounting and prompted it to recently embark on a major overhaul of its retail strategy.

Fifth, Apple has failed to get support from Prime Minister Narendra Modi’s administration when it comes to tariffs. The government has imposed import duties in order to encourage local manufacturing of smartphones.
India smartphone share Q2 2018
The above telecom statistics prepared by research firm Canalys shows the smartphone market share of Xiaomi, Samsung, Vivo and Oppo in India in Q2 2018. Phone brands shipped 32.6 million smartphones in India in Q2 2018 against 26.8 million in the same period previous year.

A base model iPhoneX is priced at nearly $1,400 in India – some 40 percent more than in the United States.

Apple, which assembles only two low-end iPhones in India, has said tariff-free imports are critical for smartphone component suppliers and essential to make local manufacturing practical.

Samsung Electronics builds all its Indian phones locally and last month opened the world’s biggest mobile manufacturing plant on the outskirts of New Delhi – which is slated to become an export hub.

A key supplier for China’s Xiaomi, another major Apple rival, this week said it would spend $200 million to build a plant in southern India.

Competition among retailers has led to rampant discounting, at both physical stores and online, and Apple’s policy to keep prices uniform within a single market has collapsed in India.

Apple appointed company veteran, Michel Coulomb, as its new India sales chief late last year and he has cut its national distributors from five to two. At a June meeting with around 20 of Apple’s distribution channel partners, Coulomb outlined a new program aimed at eliminating discounting and improving the shopping experience.

Apple India aims to make financing plans that it offers in partnership with banks more attractive.

Apple is some time away from opening its stores in the country due to the requirement that direct sales outlets have 30 percent local content.