Declining iPhone sales in India is a sign Apple is failing to adapt its business

Posted:
in iPhone
Apple has found India to be a difficult market to crack, with shipments of the iPhone reportedly slipping in the market as it struggles to compete against cheaper rivals in the country.

Apple CEO Tim Cook with India's Prime Minster Narendra Modi
Apple CEO Tim Cook with India's Prime Minster Narendra Modi


According to data from research firm Canalys, iPhone shipments in India have dropped 40 percent so far in 2018 when compared with 2017, with Apple's small 2 percent market share estimate from last year shrinking down to 1 percent.

Revenue from the market is also less than desired, according to sources of the Wall Street Journal familiar with Apple's targets, with the $1.8 billion in revenue for this fiscal year less than half what was hoped to be reached by company executives. "It's been a rout," Canalys analyst Ishan Dutt advised to the report.

India has a considerable amount of growth space available for the smartphone market compared to other major markets, where sales have stagnated. It is believed only 24 percent of the 1.3 billion potential customers in the country own smartphones, with the number increasing fast.

Apple's reportedly tiny market share is attributed by the Wall Street Journal to the company's reluctance to change its products for the Indian market, the report claims. While rivals bring down the cost of their smartphones to a level that can be easily acquired by customers, as well as tweaking their products to meet consumer concerns, Apple instead opts to continue selling its iPhones at the same price as other global markets, allowing itself to be undercut.

As an example, OnePlus has acquired a 30-percent share of the premium marketplace, according to data from Counterpoint, whereas Apple occupies 25 percent of the same market. It is claimed OnePlus' focus on improving battery life for the market helped with its marketing in the region.

The 2018 sales are apparently a reversal of fortunes for Apple in the country, which it had offered products in since 2008. Sales in India grew along with the iPhone's popularity in other countries, with people familiar with the company's strategies noting initial sales were pushed towards affluent customers before broadening to entice middle class users. By 2011, Apple had $100 million in annual revenue from iPhone sales in India, which grew to more than $1 billion by 2015.

The potential for the emerging market was noted by Apple CEO Tim Cook and other executives, producing a five-year plan to make India the next growth market and to raise annual sales to $5 billion by 2020.

Despite the company's intentions, its operations in India have encountered numerous hurdles in recent years, hampering its progress towards the $5 billion goal. A major goal was the ousting of three high-level sales executives in June as part of a restructuring, with former Nokia executive Ashish Chowdhary poached by the company to head up the operation in November.

Reports in October suggest Apple could be hit by a luxury goods tax designed to discourage the importation of goods such as the iPhone. Though it could evade the measure by performing more production with Wistron, an assembly partner it already works with for some models destined for sale in the local market, it is likely that some devices will continue to need to be imported into the country.

Apple also has intentions to expand its retail presence to include its first corporate-run stores in the country, rather than relying on resellers, but it has so far failed to receive permission to open the stores over product sourcing rules. In August, plans were apparently underway to open five or six independently run "outlets," but little has been revealed about the proposals since then.
Francules
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Comments

  • Reply 1 of 41
    I believe it is time for Apple to get out of India. Apple is not ready to change the pricing strategy and my countrymen are not ready to change their mindset.

    The entire country rallies behind cheap android phones and have zilch worries when it comes to privacy and sharing data.


    flyingdpjahblademagman1979n2itivguycaladanianedred
  • Reply 2 of 41
    They have been failing on cloud services for a long time. There’s only so much phones you can sell. Google and Microsoft have taken the business market through their suite of excellent collaborative tools and professional hosting services. Amazon has taken their cut on pure hosting services. Apple kept us with bare bones consumer stuff and it’s not working except for consumers who do not look for anything else. 
    Meanwhile I can’t even edit a ‘group’ of items in Keynote because I shared the file - a process that often fails a couple of times before it works.

    I’m super bearish on Apple. Their OS ecosystem is great but they have not built their company around truly scalable SaaS solutions. Tim Cook is the wrong leader for this day and age. 
    elijahg
  • Reply 3 of 41
    jbdragonjbdragon Posts: 2,168member
    Poor people, ever growing more expensive phone. What's hard about this? Against much cheaper Android phones. It's not hard to figure out. Who wants to pay a year of wages for a iPhone? I know I'd rather eat.
    n2itivguyelijahg
  • Reply 4 of 41
    sflocalsflocal Posts: 4,698member
    They have been failing on cloud services for a long time. There’s only so much phones you can sell. Google and Microsoft have taken the business market through their suite of excellent collaborative tools and professional hosting services. Amazon has taken their cut on pure hosting services. Apple kept us with bare bones consumer stuff and it’s not working except for consumers who do not look for anything else. 
    Meanwhile I can’t even edit a ‘group’ of items in Keynote because I shared the file - a process that often fails a couple of times before it works.

    I’m super bearish on Apple. Their OS ecosystem is great but they have not built their company around truly scalable SaaS solutions. Tim Cook is the wrong leader for this day and age. 
    *yawn*
    StrangeDaysRayz2016jahblademwhitetmaymagman1979delreyjoneselijahgJWSC
  • Reply 5 of 41
    Lol... Apple is just fine. With or without India. Like wtf?
    racerhomie3StrangeDaysjahblademwhitemagman1979
  • Reply 6 of 41
    wasanapplefanwasanapplefan Posts: 1unconfirmed, member
    Seriously? Apple is failing because of cheaper competition? Bullcrap people talk always is annoying... Apple's pricing relative to rest of the world and India is the issue - a 999$ Note 9 sells for 999$ equivalent in India but a 999$ Iphone Xs sells for 1400$ in India, the new macbook air is almost twice as expensive as the old one it replaces in India, it is infact cheaper to buy a non-touchbar retina macbook pro in India, the one that was never updated this year. India isn't a poor country, neither is the country behind cheap products but we are not stupid enough to invest crap loads of money for no reason... Just a foot note - iPhone Xr, starts at 1050$ in India and they wonder why they can't crack the market...
    yojimbo007scartartlongpathmuthuk_vanalingamn2itivguyelijahgwisey
  • Reply 7 of 41
    Most people I know who own iPhones in India buy them overseas because the high import and local tax rates in India.
    russwjahbladelongpathn2itivguycaladanianJWSC
  • Reply 8 of 41
    They have been failing on cloud services for a long time. There’s only so much phones you can sell. Google and Microsoft have taken the business market through their suite of excellent collaborative tools and professional hosting services. Amazon has taken their cut on pure hosting services. Apple kept us with bare bones consumer stuff and it’s not working except for consumers who do not look for anything else. 
    Meanwhile I can’t even edit a ‘group’ of items in Keynote because I shared the file - a process that often fails a couple of times before it works.

    I’m super bearish on Apple. Their OS ecosystem is great but they have not built their company around truly scalable SaaS solutions. Tim Cook is the wrong leader for this day and age. 
    I'm trying to understand but can't comprehend what you're trying to say. Yes, Apple is intentionally not strong on social (good or bad depending on the perspective). Collaborative tools have nothing to do with a mobile device necessarily so its a discrete issue. Microsoft failed spectacularly at mobile devices. Now, if someone wants to buy discounted phones because they want the vendor to sell their information (Google) then Apple is not the right choice. The issue here is that there is a choice - if its a country known for being cheap even at the cost of privacy then a higher quality, secure phone will not get traction. There is absolutely no need to bend the model to sell to a low margin country. Porsche will not lose its mind because its not able to market a Kia competitor for the third world market.
    jahbladeJWSC
  • Reply 9 of 41
    Seriously? Apple is failing because of cheaper competition? Bullcrap people talk always is annoying... Apple's pricing relative to rest of the world and India is the issue - a 999$ Note 9 sells for 999$ equivalent in India but a 999$ Iphone Xs sells for 1400$ in India, the new macbook air is almost twice as expensive as the old one it replaces in India, it is infact cheaper to buy a non-touchbar retina macbook pro in India, the one that was never updated this year. India isn't a poor country, neither is the country behind cheap products but we are not stupid enough to invest crap loads of money for no reason... Just a foot note - iPhone Xr, starts at 1050$ in India and they wonder why they can't crack the market...
    Shouldn't you do your own research before blabbering? A quick search shows the the higher pricing is because of protective measures of Indian market and Apple not having a manufacturing facility there. (https://www.businesstoday.in/technology/news/why-iphone-7-is-40-per-cent-more-expensive-in-india-than-us/story/237149.html) Are you saying that Apple should open a charity for India and compromise on the margin? Brilliant way to "crack a market", eh? Sell for a loss, if need be because we HAVE to sell to India and China. I wonder how much $$ does the India market spend on the App Store? If it wasn't for the dumb Wall Street expectation of growth, Apple shouldn't even target India and China.
    mwhiteelijahg
  • Reply 10 of 41
    They have been failing on cloud services for a long time. 
    Reference needed.
    Tim Cook is the wrong leader for this day and age. 
    And yet, the financial health of the company shows otherwise, pointing to one of the most successful CEOs of modern history. Oops. Man, how long can he keep screwing this up!? When will all of Apple's customers stop throwing their money at Apple and routinely ranking them very high on consumer satisfaction surveys? Don't they know -- APPLE IS FAILING!!! 

    Get real. 
    jahblademwhitecharlesgrestmaymagman1979delreyjoneselijahgJWSC
  • Reply 11 of 41

     India isn't a poor country, 
    Are you sure about that?

    https://www.cnn.com/2018/06/26/africa/nigeria-overtakes-india-extreme-poverty-intl/index.html

    It's betting better, but still, it's poor. 
  • Reply 12 of 41
    @StrangeDays ;

    I wouldn't say they're failing yet.

    They've only lost close to 30% capitalization ($250 billion) in the past few months.
    Oh - also lost #2 slot largest smartphone manufacturer in the world
    Maybe some declining marking share as well ? 
    And obviously suppliers are putting out warnings about the slow sales

    I wouldn't say super positive, but definitely not failing ...  I think Buffet has only lost $17 billion himself, really.

    edited December 2018 elijahg
  • Reply 13 of 41
    maestro64maestro64 Posts: 4,656member
    vulcan__ said:
    I believe it is time for Apple to get out of India. Apple is not ready to change the pricing strategy and my countrymen are not ready to change their mindset.

    The entire country rallies behind cheap android phones and have zilch worries when it comes to privacy and sharing data.


    Yep, unless Apple want to get into the race to the bottom with cheap phones they will not be successful in India. This is bad path for Apple, if Apple dropped the price low enough to attach a buyers attention, it will create a problem for them in the balance of the world. If they sell cheap phones in India the rest of us will find out and demand the same thing. In India, they see no difference between any cell phone other than the price. they see they as pure commodity and interchangeable. All the things Apple brings to the table has not value in India. Then you have the fact that most of the people in India can not even afford a phone, the one who can only buy on price at the end of the day.
    magman1979brisancen2itivguybeowulfschmidt
  • Reply 14 of 41
    Seriously? Apple is failing because of cheaper competition? Bullcrap people talk always is annoying... Apple's pricing relative to rest of the world and India is the issue - a 999$ Note 9 sells for 999$ equivalent in India but a 999$ Iphone Xs sells for 1400$ in India, the new macbook air is almost twice as expensive as the old one it replaces in India, it is infact cheaper to buy a non-touchbar retina macbook pro in India, the one that was never updated this year. India isn't a poor country, neither is the country behind cheap products but we are not stupid enough to invest crap loads of money for no reason... Just a foot note - iPhone Xr, starts at 1050$ in India and they wonder why they can't crack the market...
    So why does the Note 9 sell for the same price, but the iPhone has a huge tariff on it?
  • Reply 15 of 41
    wood1208wood1208 Posts: 2,007member
    When cheapest and best is a mantra in country than hard to win.
    magman1979
  • Reply 16 of 41
    Apple isn’t failing to adapt. They are simply not a “cheap” product dealer. 

    India isnt up for that. 

    Rather than apple change, they should just decide to be true to their core. It may be time to leave India. Or only sell last years refurbs there. 
    magman1979brisancen2itivguy
  • Reply 17 of 41
    @StrangeDays ;

    I wouldn't say they're failing yet.

    They've only lost close to 30% capitalization ($250 billion) in the past few months.
    Oh - also lost #2 slot largest smartphone manufacturer in the world
    Maybe some declining marking share as well ? 
    And obviously suppliers are putting out warnings about the slow sales

    I wouldn't say super positive, but definitely not failing ...  I think Buffet has only lost $17 billion himself, really.
    Market cap doesn’t determine whether a company is successful. Losing market cap doesn’t mean a company is failing or is less successful. Profit is the measure of corporate health. Profit is the air corporations breathe. Apple’s profit indicates a very, very healthy company. They are the most successful public corp in human history. That hasn’t changed in three months, despite the whims of investors. 

    Familiarize yourself with “The Dumbest Idea In The World: Maximizing Shareholder Value”. Apple doesn’t manage for this. 

    edited December 2018 charlesgrestmayRayz2016brisancedelreyjones
  • Reply 18 of 41
    Seriously? Apple is failing because of cheaper competition? Bullcrap people talk always is annoying... Apple's pricing relative to rest of the world and India is the issue - a 999$ Note 9 sells for 999$ equivalent in India but a 999$ Iphone Xs sells for 1400$ in India, the new macbook air is almost twice as expensive as the old one it replaces in India, it is infact cheaper to buy a non-touchbar retina macbook pro in India, the one that was never updated this year. India isn't a poor country, neither is the country behind cheap products but we are not stupid enough to invest crap loads of money for no reason... Just a foot note - iPhone Xr, starts at 1050$ in India and they wonder why they can't crack the market...
    India is a very poor country.   Easily 10+ years behind China  

    Blame your own incompetent government for crazy import taxes that drive up the cost of everything  
    magman1979
  • Reply 19 of 41

    Apple isn’t failing to adapt. They are simply not a “cheap” product dealer. 

    India isnt up for that. 

    Rather than apple change, they should just decide to be true to their core. It may be time to leave India. Or only sell last years refurbs there. 
    Or, they continue to do business there and sell what they sell, at their usual profit margin. Why wouldn’t they?
    brisancemuthuk_vanalingam
  • Reply 20 of 41
    Seriously? Apple is failing because of cheaper competition? Bullcrap people talk always is annoying... Apple's pricing relative to rest of the world and India is the issue - a 999$ Note 9 sells for 999$ equivalent in India but a 999$ Iphone Xs sells for 1400$ in India, the new macbook air is almost twice as expensive as the old one it replaces in India, it is infact cheaper to buy a non-touchbar retina macbook pro in India, the one that was never updated this year. India isn't a poor country, neither is the country behind cheap products but we are not stupid enough to invest crap loads of money for no reason... Just a foot note - iPhone Xr, starts at 1050$ in India and they wonder why they can't crack the market...
    Shouldn't you do your own research before blabbering? A quick search shows the the higher pricing is because of protective measures of Indian market and Apple not having a manufacturing facility there. (https://www.businesstoday.in/technology/news/why-iphone-7-is-40-per-cent-more-expensive-in-india-than-us/story/237149.html) Are you saying that Apple should open a charity for India and compromise on the margin? Brilliant way to "crack a market", eh? Sell for a loss, if need be because we HAVE to sell to India and China. I wonder how much $$ does the India market spend on the App Store? If it wasn't for the dumb Wall Street expectation of growth, Apple shouldn't even target India and China.

    You're correct on India, wrong on China.  China is Apple's highest profit margin % region 





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