OnePlus plus has bit into Apple in India, and things may only get worse
Apple is facing not just lower iPhone sales in India during 2018, but even a shrinking userbase as it deals with the likes of Android-based phone maker OnePlus, according to new research data.
The OnePlus 6T.
Sales could fall from 2017's estimated 3 million units to 2 million, Counterpoint Research told Reuters. The iPhone's local userbase is meanwhile forecast to drop 10 percent to 9 million, a far shadow of 436 million Android users.
Half of the new iPhone sales are expected to come from older models, owing to the cost of the product in the country. Because the only iPhones assembled locally have been the SE and 6s, Apple is thought to import between 70 and 80 percent of what it sells, subjecting the company to high import duties intended to encourage local industry. Apple is the only major phone vendor which doesn't do manufacturing in India.
"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," commented IDC analyst Navkendar Singh. "In the process they are losing around 15-20 percent of their tax incentive... which they could have passed on to the consumer."
Apple has traditionally declined to produce low-cost new phones, preferring to target "premium" customers. But even in the market of smartphones over $400, Apple reportedly sat behind Samsung and OnePlus in the September quarter.
OnePlus in particular is believed to be a rising challenger. The company is known for offering relatively high-end performance for a low price, and its latest device -- the OnePlus 6T -- is about half the cost of an iPhone XR in India.
In the past few months, about 10 to 15 percent of OnePlus' new customers have been switching from iPhones, the firm's Indian head told Reuters.
Apple has reportedly slashed the number of distributors in the country from five to two. Reuters sourced indicated that recent executive departures were likely linked to this.
Assembly of the iPhone SE at the Karnataka Wistron facility began in mid-May of 2017. Officials in the Indian government hope the price for the iPhone SE will be cut over time by as much as $100 compared to the current local price, though Apple is likely to try and avoid too much of a reduction in order to preserve its margins. That price cut has not happened as of yet.
The first iPhone SE models built in India by Wistron went on sale in various cities around India in June of 2017. The devices are marked "Designed by Apple in California, Assembled in India."
As far as sales channels are concerned, Apple is considering flagship stores in New Delhi, Bangalore, and Mumbai -- all three locations where most of India consumers wealth is centered. This is in addition to the Apple Authorized Reseller expansion that Apple was said to be examining in March 2017.
In January of 2018, the India government modified its taxation and sourcing laws that allow "single-brand retailers" that are foreign owned to temporarily meet a 30 percent sourcing requirement by buying goods made in India and selling them in other countries. The waiver is for five years, at which point, the company would be required to source 30 percent of its goods sold in retail stores from within the country.
The OnePlus 6T.
Sales could fall from 2017's estimated 3 million units to 2 million, Counterpoint Research told Reuters. The iPhone's local userbase is meanwhile forecast to drop 10 percent to 9 million, a far shadow of 436 million Android users.
Half of the new iPhone sales are expected to come from older models, owing to the cost of the product in the country. Because the only iPhones assembled locally have been the SE and 6s, Apple is thought to import between 70 and 80 percent of what it sells, subjecting the company to high import duties intended to encourage local industry. Apple is the only major phone vendor which doesn't do manufacturing in India.
"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," commented IDC analyst Navkendar Singh. "In the process they are losing around 15-20 percent of their tax incentive... which they could have passed on to the consumer."
Apple has traditionally declined to produce low-cost new phones, preferring to target "premium" customers. But even in the market of smartphones over $400, Apple reportedly sat behind Samsung and OnePlus in the September quarter.
OnePlus in particular is believed to be a rising challenger. The company is known for offering relatively high-end performance for a low price, and its latest device -- the OnePlus 6T -- is about half the cost of an iPhone XR in India.
In the past few months, about 10 to 15 percent of OnePlus' new customers have been switching from iPhones, the firm's Indian head told Reuters.
Apple has reportedly slashed the number of distributors in the country from five to two. Reuters sourced indicated that recent executive departures were likely linked to this.
Apple in India
Manufacturing the iPhone SE and possibly other devices in the future with expansion in India fulfills a number of conditions imposed on Apple as a condition of doing business in the future, along with providing tax breaks. However, the new demands that Apple is making in order to expand manufacturing in the country may pose a problem in the long run -- or may just be a tactic that the government has used in the past of "leaking" information, and essentially negotiating through the press.Assembly of the iPhone SE at the Karnataka Wistron facility began in mid-May of 2017. Officials in the Indian government hope the price for the iPhone SE will be cut over time by as much as $100 compared to the current local price, though Apple is likely to try and avoid too much of a reduction in order to preserve its margins. That price cut has not happened as of yet.
The first iPhone SE models built in India by Wistron went on sale in various cities around India in June of 2017. The devices are marked "Designed by Apple in California, Assembled in India."
As far as sales channels are concerned, Apple is considering flagship stores in New Delhi, Bangalore, and Mumbai -- all three locations where most of India consumers wealth is centered. This is in addition to the Apple Authorized Reseller expansion that Apple was said to be examining in March 2017.
In January of 2018, the India government modified its taxation and sourcing laws that allow "single-brand retailers" that are foreign owned to temporarily meet a 30 percent sourcing requirement by buying goods made in India and selling them in other countries. The waiver is for five years, at which point, the company would be required to source 30 percent of its goods sold in retail stores from within the country.
Comments
A couple of years ago, the longevity of Apple devices was a compelling reason to buy them. But at current prices, when one can buy two flagship smartphones like Note 9 and still be left with some cash, the argument is rendered moot. And unlike people in the western world, most Indians don’t exactly know a lot of people who own iPhones, making iMessages/FaceTime just another gimmick. If anything, iPhones no longer “just work” the way they were famous for. For example, Samsung Pay is almost universally accepted throughout the country thanks to MST which doesn’t need an overhaul of the POS terminals. Combined with Google Pay/UPI, an Android Phone works almost everywhere. Google Assistant actually works and provides information about things that Indians actually care about. SMS is another such example. One just has to look at Microsoft SMS app to see how far Apple has been left behind — iPhones don’t even allow you to segregate personal messages from commercial ones like those from your telecom operator — or to manually unmark a message once it has been marked as spam.
I recently decided to upgrade from my aging iPhone 7 Plus, and as a longtime iPhone user and evangelist, my first preference was naturally an iPhone XS Max. But when I realised that the device costs around 124,900 INR — approximately 1,725 USD — for the 256 GB model I wanted, I just couldn’t justify the purchase. Not when the Note 9 — which does a lot more for a power user like me than any iPhone — is available for 61,000 INR — approximately 840 USD. Was the price a factor? Certainly! But I would still have paid the price if iPhones worked for me the way they do for someone in the US. I have used an iPhone in the US — and I found it an absolute joy to use — miles ahead of any Android. But why would I want to pay twice the amount for a device which doesn’t even work they way it is advertised?
Don’t get me wrong — I am not someone who had an epiphany that Android is so much better. No, I still believe that iOS ecosystem is far superior to anything Android has to offer — although the gap is narrowing with every passing year. I am just a longtime Indian iPhone user who is frustrated by the lack of commitment Apple has shown the Indian market — no matter how bullish Tim Cook might feel.
And that is the crux of the problem — a serious lack of commitment to the market. Given the way Apple has been building things for the Chinese users, I — along with several others — had seriously hoped that Apple would do similar things for India. At this point, I don’t believe it is a matter of resources or priorities anymore. It’s a simple lack of commitment. At this point, an iPhone has become a mere rich snob’s toy in India — the kind of people who use it more or less like a feature phone of the past. The real Apple loyalists have slowly been slipping away. And given how much of a pain it is to switch platforms — and that Android is not as horrible as it used to be — they are unlikely to come back once gone.
Oh, and by the way, OnePlus (and Xiaomi, to a lesser extant) is successful not just because of the pricing — although that is certainly a factor. A major factor is that they actually listen to what the users want and deliver to the best of their abilities. Apple, on the other hand, is content to sit in their ivory tower and decide what is best for their users. While the Android world has progressed by leaps and bounds over the past few years, the iPhone has stagnated — iterating over the same old device over and over. Reminds me of Microsoft of 2000s — content to milk the cash cow by whatever means they could — including flashy marketing and gimmicky features like Animoji — while ignoring the real problems.
And what is wrong with the Indian Government not wanting to let the country be used as a dumping ground for e-waste? I, for one, fully support the decision.
Yeah, indians are moving from android phones to dumb jio phones & others. Search the web for the link. I think I read it on economictimes.indiatimes.
I always hear about reversals of fortunes and now Apple is on the negatively receiving end of said reversal. Everyone is always happy to see Apple stock end up in the toilet and now they're all having a good laugh at the former trillion-dollar company. They were all sure it wouldn't last for Apple and now they're right. I'm not actually worried as long as I'm receiving my fine Apple dividends. It just kind of hurts how Apple is being left out in the cold while the rest of the tech stocks are burning hot. Only Apple has to worry about things like peak iPhone every single quarter. There hasn't been anything close to an iPhone 'supercycle' in the past few years, so why do some people keep talking about it happening.
The party's over... dum-de-dum-dum. (sung in a wistful voice)
Android is the phone of the people, just as Toyota is the king of cars worldwide. Not everyone has to drive around in a mercedes to get from a to b.
It is also fun to pretend that High-end Android devices are not ‘expensive’. The Mate20 is launching in Canada for $1300, the Note 9 is $1249. So, much more affordable! These are not the devices being sold in India. Cheap sub-$200 phones probably are the most popular and no one is making profit on those.
Good for One Plus but let’s see who the flavor of the week Android vendor of choice is in a couple years. A couple years ago Samsung was Android vendor of choice with no other really good option. Time will tell.