Is Apple Being Kicked Out Of Indian Smart Phone Market?

During Diwali festival sales this week, Samee Alam – a software engineer – was so sure he would buy a new iPhone, but he ended up getting a cheaper OnePlus phone instead.

27-year-old Alam, who watches shows, surfs the Internet and shops online for hours a day, should have become another perfect customer for Apple as the company strives to increase its sales in India’s 1.3-billion-consumer market.

Unfortunately, consumers in India make an annual average of $2,000 and the cheapest new iPhone, the XR costs Rs 76,900 ($1,058), twice the price of other phones.

iPhone XR

According to Counterpoint Research Hong Kong, in 2017, Apple sold three million phones, but this year the figure went down by one-third, which is the first fall in the past for years. Apple CEO Tim Cook pointed out that over half the sales came from cheaper older phones.

That’s not all, in the premium segment for over-400-dollar smartphones, Apple’s sales in the third quarter were lower than Samsung’s and OnePlus’.

Alam shared that he had never used iPhone before and would love to have one. But his criteria for phone choice including camera, processor, and storage are all offered by the cheaper OnePlus. Instead of the Rs 100,000 iPhone, he can buy three good smartphones or a decent laptop for playing games.

Instead of an iPhone, Alam chose OnePlus

Last year, good sales of Mac and iPhones earned Apple $2 billion in total, twice the money OnePlus made. But as stated by Counterpoint, the gap will shrink.

In response to Reuters, Vikas Agarwal, head of OnePlus India, said that among its new customers in recent months, 10-15 percent used to be Apple’s users with some of the most loyal customers.

High import taxes

But it’s not all about price.

At the beginning of this year, the company lost a few top executives due to various regulatory headaches.

Although an Apple spokesperson claimed that departure did not contribute to the firm’s performance, there are leaks saying departure issue is causing Apple to change its distribution in India, which was cut down from five to two.

According to hidden sources that are in business relationships with Apple, also told that Apple’s Michel Columb is still trying to finalize business relations since she took over the operation in India in December.

Apple refused to give further comments

Prime Minister Narendra Modi wants companies to make their production local, that’s why he is gradually raising import taxes on both simple and sophisticated phones.

Prime Minister Narendra Modi

Some smartphone giants like Oppo, Xiaomi and Samsung Electronics has rushed and poured millions of dollars to build factories Bengaluru and Delhi tech hub Noida. Apple is the only giant staying out of this race.

Consequently, the firm still imports approximately 70-80 percent of its handsets, resulting in high import taxes, which raises the phone price, said industry experts.

In the US, the iPhone XR’s cost is about Rs 54,400, which is two-thirds of that in India. In addition, the iPhones sold in the US market come with wireless carriers, while those sold in India do not.

IDC’s analyst Navkendar stated that Apple does not believe India’s manufacturing system enough to transfer part of its production out of China. Right now, Apple is losing about 15-20 percent of their duty incentive while they could have passed it on to customers.

Deserted stores

Last Saturday, despite Diwali being the most festive selling time for electronic items in India, there were few customers at the Apple store in a big shopping mall in Bengaluru.

In terms of Apple down sales, salesman Aejaz Ahmed added that the new rising phones have quite the same features and appearance as iPhones, so it’s really hard to tell the difference.

Some sales staff in Bengaluru and nearby Chennai consider the new OnePlus 6T the main problem for Apples since it is priced at Rs 37,999, just half the price of the iPhone XR.

As a result, the number of Indian Apple users may decline to nine million users, as opposed to 436 million Android users, says Counterpoint’s Neil Shah.