Apple Inc. (NASDAQ:AAPL) recently launched their new flagship lineup of iPhone for 2018, and they were met with equal amounts of hype and consternation. There have been some concerns about a lack of innovation and sufficient differentiating factors between the older iPhone X and the new iPhone XS and iPhone XS Max, which is clearly reflecting in the sales of iPhone XS in India.
This is also being somewhat reflected in the sales figures, with the preorder volume for the newer iPhones being notably weaker compared to the iPhone X launched last year. Nowhere is this fact more keenly felt than in India where, according to sources, sales of iPhone XS and iPhone XS Max in India during the first three days of the launch were only 55-60% to 2017’s iPhone X.
Sales of iPhone XS And XS Max in India
For a while now, India has been a tough nut to crack for Apple. A while ago, we outlined why India was so important to Apple’s global efforts in the near future, as well how Apple is going about trying to replicate their global success in India as well. Thus far, it is quite apparent that not all of Apple’s subsequent efforts in India have been all that successful, however, there were some encouraging signs. In FY 2017, Apple managed to generate nearly 10x the profit of companies like Xiaomi, Oppo and Vivo combined, despite only holding a minuscule market share in the region.
Nevertheless, this is not a sustainable growth model, and at some point, Apple will have to start looking at gaining market share if they want to be successful in India. Keeping that in mind, the fact that as much as 40-45% of the stock of the iPhone XS/XS Max was left unsold in over 1,500 stores across the country (as of 30th September) is rather worrying. Of course, the primary reasons behind these disappointing sales are clear:-
- Price – The price of Apple products has always been a sticking point for customers in India. The already exorbitant pricing of Apple’s products is only exacerbated by taxes and customs duties in India, putting them out of reach for many smartphone buyers. The iPhones XS starts at an eye-watering amount of 99,900 INR for the base 64 GB version of the iPhone X, going up to a ludicrous 1,44,900 for the top end iPhone XS Max. For the sake of comparison, the flagship Samsung Galaxy Note 9 starts at a much more palatable 67,900 INR.
- iPhone XR – There is a palpable sense in the market that Indian consumers are waiting for the more affordable iPhone XR. Traditionally, Apple’s business in India is driven largely by sales of older, cheaper models. With a starting price of 76,900 INR, we may see many more customers opting for this relatively more budget-friendly option. The current situation may just be a repeat of last year, when sales of the iPhone 8/8 Plus suffered in India due to anticipation for the iPhone X.
- Timing – Local traditions and superstitions may have a part to play in the current slump as well. As the festive season in India quickly approaches, sales of the iPhone XS, XS Max may yet pick up.
- Greater number of physical stores – Another mitigating factor for such a large volume of unsold stock may be due to Apple’s expansion efforts in India. 2018 saw India have more Apple authorized stores with larger stock volumes than ever before. Subhash Chandra, MD at Sangeetha Mobiles claims that his stores sold more smartphone units in absolute terms, despite having no same-store growth in iPhone sales due to higher stock availability and growing number of stores.
The sales of iPhone XS and iPhone XS Max in India is expected to remain low due to the higher price band and price sensitivity nature of smartphone buyers in India. However, iPhone XR, which is comparatively low-price 2018 iPhone model, may get the job done for Apple. On the other hand, considering it’s not-so-exciting specs, how far iPhone XR would be able to lure customers only time will tell.
