Tuesday , September 27 2022

Apple breaks down in India – here's why


BENGALUR – Software Engineer Samee Alam was ready to make a big leap and buy iPhone at this year's Divali Festival, but at the last moment he chose the cheaper Chinese competitor OnePlus.

Alam, 27, spends several hours on his phones watching shows, surfing and shopping, making it the perfect goal for Apple Inc., as he seeks to increase sales among Indian 1.3 billion consumers.

But in a country where the average per capita income is about $ 2,000 per year, even the cheapest of this year's new iPhone, the KSR of 76,900 rupees ($ 1,058) costs twice as many alternatives.

Control surveys in Hong Kong say iPhone sales are falling. Of the three million phones in 2017, sales could sink to two million this year, according to their estimation, the first decline in four years.

More than a half of this sales comes from cheaper older models, and the lack of progress in India was one of the problems led by CEO Tim Cook, who made the disappointing outlook for holidays last week.

Even in the premium segment, smartphones that cost more than $ 400, Apple in the third quarter lagged behind Samsung and Chinese OnePlus.

"I never used iPhone and I wanted to get my hands on myself, but it did not make sense," says Alam, who works for one of the raft companies that invested in the southern city of Bengaluru, is often called the Indian Silicon Valley.

"I'm looking for a storage device, a camera and a processor in phones and cheaper alternatives like OnePlus are more valuable for money. New iPhones cost almost 100,000 rupees – I can get three good phones for that price or even a decent laptop for games."

Solid Mac sales and the high price of a unit of iPhones meant that Apple's total revenue of $ 2 billion in India last year was twice as big as OnePlus that only sells mobile phones. But the data from the counterpoint tells me that this will also decrease.

One of the main owners of OnePlus India, Vikas Agarval, told Reuters this week that 10-15 percent of new customers have been separated from Apple in recent months, saying even some loyalists give up the upgrade of their phones.


Apple's problems exceed the price.

The company, which has faced a number of regulatory headaches, has lost some of its top executives in India earlier this year.

A spokeswoman for Apple said that the departures had nothing to do with the company's results, but people familiar with this issue said that the departures were probably related to a company that changed its distribution system. Apple has reduced the number of distributors in the country to two out of five.

Sources who refused to be identified because they had business relations with Apple also said that Michel Columbus's veteran continues to work to strengthen business relations after taking control of the Indian operation in December.

Apple refused to comment further.

Prime Minister Narendra Modi's government has endeavored to make local manufacturers in the production of electronic device manufacturers by continually moving the supply chain from simple phone cases to sophisticated chipsets and boards.

Together with local companies like Lava, global smart giants including Samsung Electronics Co. Ltd, Oppo and Xiaomi Corp have aggressively reacted and invested millions of dollars in plants around the Noida Technology Center in Bengaluru and Delhi.

Apple is the only major non-phone player in the country and only makes two low-cost older models through Vistron Corp in Bengaluru.

Industry experts say the company still imports about 70-80% of its phones. This leads to high import charges, which in turn make the phones expensive.

In the United States, the basic iPhone KSR model costs $ 749 or about 54,400 rupees, just two-thirds of its retail price in India. In addition, while US phones are subsidized by contract with wireless operators, Apple's phones in India are not.

"At the moment, Apple does not have enough confidence … now in the Indian production system, to plant and move some production from China," said analyst Navkand Singh of IDC's technology consulting firm.

"In the process, they lose about 15-20 percent of their tax incentives … which they could transfer to the consumer."


Divali, the Light Festival, is the highest electronics sales in India, but Apple's store in one of the major shopping centers in Bengaluru was abandoned last Saturday.

"The features of the phone that appear are very similar to the iPhone," says salesman Aejaz Ahmed, adding that volumes have fallen in recent months. "It's very difficult to distinguish the difference from a distance, because they even look so similar."

Sales associates in several stores in Bengaluru and Chennai around the world have announced the launch of this year's latest OnePlus phone as the main problem for the American Phonemeyer. At 37,999 rupees, 6T Chinese companies are half the price of the KSR.

As a result, says Neil Shah of Counterpoint, Apple's user base in India this year will drop about 10 percent to nine million users. This is compared with 436 million Android users.

"If your user base falls, you lose the flu in the market," he says. "The new bazaar does not come."

Reporting Vibhuti Sharma, Arnab Paul, Manas Mishra and Aaron Saldanha in Bengaluru; Writing Patrick Graham and Nivedit Bhattacharjee; montage Bernard Orr

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