India Now in Apple Radar

Though Apple's India revenues grew by 400%, the channel is still divided on how Apple is looking at this market

Recently, in an interview with Bloomberg Businesweek, Apple's Tim Cook said, "There's always a large junk part of the market..We're not in the junk business." He was justifying his company's strategy to cater only to ‘niche' market rather than competing with low cost and lower end device; as Apple launched iPhone 5c in an unsubsidized price, against anticipation. 

This clearly implies that Apple never intended to compete at lower bottom of the market. In the same interview he said, "I'm not going to lose sleep over that other market, because it's just not who we are."

Whether or not people believe his strategy but certainly there are a few of them in India, who thinks otherwise.

"Who says Apple is not in junk business, it is dumping i-phone 4 in the Indian market with buy back offers," says Rajiv Mehta who owns Zest Systems and its retail arm for telecom products--Zest Arena in Delh-NCR.

Under this pretext, the company rolled out lucrative offers which allowed customers to exchange their old smart phones for a cash discount of minimum `6,000 on the purchase of an 8 GB iPhone 4. "This is clearly a dumping of older stock though it has achieved a great success with students, working women. It has actually increased Apple's market share in the smart phone segment in India," says Mehta.

From each store, Apple contributes 40% to Zest Arena's business, out of which 2/3rd comes from the iPhone 4 sales, in some time.

Last year Apple tied with leading distributors like Ingram Micro and Redington India and there was a little shift in its business model. The product was made available to Multi-Brand Outlet (MBO) channel apart from its usual Apple Premier Reseller (APR) channel. For a long time, India was never a potential market for Apple. Seeing the recent trends, the company is trying hard to increase its market share in India where Samsung has the upper hand.

Apple proactive from the last one year can be seen from the reports which states, "Company shipped nearly 200,000 iPhones to India between April and June, a three-fold jump from a year earlier when it shipped just 72,000 phones."

In the sidelines of this year's June's quarterly financial sharing, Tim Cook mentioned that sales in "India was up over 400%." iPhone 4 buyback offer is suggested to be the main reason behind all aggressive growth in India suddenly. It is also said that the company is planning to edge up its retail operations in the country with an aim to have more than 200 reseller locations in the country by 2015.

An Economic Times report stated, "Apple India's revenues surged threefold to over `2,000 crore for the year ended March 2012, and analysts expect surging iPhone sales to propel the company's top line to over $1 bn (about `5,400 crore) in the current fiscal year."

The report also quoted an IDC analyst from Singapore who said that in the year 2012-13, Apple's iPhone shipments to India will range from 6 lakh to 7 lakh units. She added, "Between October 2012 and September 2013 - which is Apple's financial year - the company will ship more than 1 mn iPhones to India, which could translate into $1-bn sales during the period. "Apple India should generate $1 bn sales between April 2013 and March 2014 as well,"

This is completely in tune of its strategy. Rita Budhay of Business Algorithms, based in Nagpur, also feels that Apple is surely into aggressive selling in India and it is one of the reason that Apple gives more discounts and favors to its APR channels when compared to the MBO channel, in which she operates.

This is clearly in the line that Apple is giving more strength to India for bigger sales. She adds, "I think Apple also sells below MRPs providing more discounts to APR channels. Though she is unhappy with the way there is a difference in Apple's policy with MBO channels, but she does agree that Apple is working hard to counter Samsung portfolio. She sells Apple's tablets and mac books.

Mumbai-based Bimal Jhaveri from HardTrek agrees, "There has been huge surge in the sales from the previous year. The festive season coming in, Apple has beefed up its marketing strategy.

Corporates

Apple is also focusing to tap regional as well as national level partners to boost its enterprise market in India but Mehta doesn't agree to this.

He says that Apple doesn't provide enough margins to its partners for corporate reselling when we compared to the brands like Samsung. However, with the surge in the corporate companies primarily adapting to BYOD concept, Apple surely has market there with its long range of tablets.

5c and 5s

Apple's launch attracted a huge crowd in the in the New York City, and it hit a new record year hit a new record with 1,417 people in line for the launch at its flagship store, according to a online tech site, mashable.com.

It stated, "That is the longest the line ever at the flagship store for an iPhone launch - beating the line for the iPhone 4 - and it marks an 83% increase from the number of people who waited in line there for the iPhone 5."

The euphoria around this product did not let down the company although few were disappointed because 5c did not come with low price. In a press release, Time Cook on the weekend ending the launch said, "This is our best iPhone launch yet?more than nine million new iPhones sold?a new record for first weekend sales,"

But Indian analysts did not seem to be happy with it. Tarun Pathak, Assistant Manager, Telecoms wrote in a Cyber Media blog, " " From brief analysis of average selling price (ASP) of smart phones in emerging markets, I don't think the iPhone 5c will be able to win over new customers in these geographies with a model that boasts multiple colours as a USP.

"It is in fact a trimmed-down version of the older model launched a year back at a price per unit which is almost two times. Apart from pricing, other specifications such as screen size will go against Apple, as people in emerging markets have shown a strong preference for the bigger screen size ‘phablet' devices (5" to 7") in the last few quarters. The entry level Android OS-based smartphone models in these emerging markets will easily beat the Apple 5c, with its current specs. Hence, I feel the launch of a new model like the iPhone 5c does not really serve any clear purpose."