The second biggest mobile market (in terms of mobile subscribers) and on-going explosive growth – India is being sold to companies as one of the hot markets in mobile space. And, Apple – world’s second best brand– is no exception, especially when arch rival Google’s Android is riding high with the help of biggest market share pie coming from India. After six versions of iPhone and 3 versions of iPad release, Apple has finally understood the fact that Indian market is inevitable. Therefore, Apple has started exploring all possibilities to set its own shops – directly controlled by Apple – without making telecom companies and electronic retailers as its face in India. Consequently, company has terminated all agreements with Airtel and Aircel that allow exclusive iPhone 5 sales rights. You will not have to queue up in any Airtel or Aircel showroom to grab the latest iPhone 5.
Till now, Apple is selling their revolutionary products through various premium and non-premium resellers (like Reliance, Imagination etc), telecom companies (Airtel and Aircel) and various distributors in India. However, this setup has been subsidizing Apple’s great pre-sales and post-support service for long resulting in keeping a large fan base away from products. The setup is not only topping up extra layer of products cost – making products more expensive-, but also flourishing grey market that makes Apple products available much earlier than official availability.
Reportedly, Apple has appointed two executives to explore possibilities to venture in India by its own. However, spokesperson has denied commenting, stating Apple’s strategy ‘not to comment over speculations and rumors’.
Apple’s biggest assembly and manufacturing products’ line – known as Foxconn – is based in China. Foxconn is responsible to control major production share of iPhone and iPad despite of its own challenges in recent time.
Apple would have been allowed to own only 51% ( as maximum) in its own Indian stores, until recently. The rule discouraged many foreign retail giants to enter into Indian market. However, government’s flexible stand has now allowed foreign players to own 100% share in its own Indian store – but with a stern condition; foreign companies will have to source atleast 30% of their sales from local firms – something which is quite difficult to meet for Apple.
Apple is, definitely, not to shift their production strategy from Foxconn to any Indian base firm in order to satisfy the said rule.
“Apple might be able to open stores in India only if local rules are relaxed to allow the U.S. company’s outsourcing operations in India to be included as part of the mandatory 30% local-sourcing requirement for foreign retailers” said G Rajeev – a senior market analyst at research firm IDC.
For Apple, FDI is not only the challenge; the strong hold of Korean and Taiwanese electronics giants – Samsung, LG and HTC – and surging astuteness of local handset makers – Micromax, Karbonn etc – is another big aspects to work upon.
Last year India recorded 87% growth in Smartphone shipments and country is expected to control 13.4% of global mobile market by 2013. However, Android is the biggest gainer controlling more than 50% of Smartphone OS market share in India. Interestingly, Apple’s biggest competitor in recent time Samsung is the main driving force behind Android growth in India. Recent blow for Samsung against Apple’s steered patent stand is indeed fresh among management and company will do everything possible to keep Apple away from India.
On the other side, Google has holding his cards towards chest and will have to protect its own dominance (Android) in India. Though, Google is riding higher than Apple in U.S. Smartphone market too but Apple’s Q2 growth is worrisome for the company.
The actual fight between Apple and Google is not about OS penetration, it’s about mobile app market share. By 2015, Mobile app market share is expected to stand worth $100 billion and India will, apparently, be having a significant say in that.
It’s going to be tough for Apple to keep its growth intact in App development market despite of the fact that iOS App developers make more money than Android. And, Microsoft – just at the corner only to increase the woes- is sharpning its Windows Phone 8 for effective assassination.
In all such scenarios, it’s just inevitable for Apple to keep ignoring few biggest mobile and app markets of the world. Apple must have to come out of its comfort and dominating U.S. market – but with different strategies and bag-full offerings to dominate in cut-throat competition.