India, being the second largest smartphone market in the world with a population of 1.3 billion, has been the target for Apple for many years. Apple has recently confirmed to Wall Street Journal that the company has completed its first trial run of assembling iPhone SE in India. The initiative was long overdue by Apple owing to tough competition and slow growth of iPhone’s in India.
The Indian market has also been a high target spot for Apple. India has recently surpassed U.S. in terms of growth. It is also expected that smartphone sales will approximately reach one billion mark during the next five years.
Also Read: India uses public Wi-Fi mainly to watch porn
According to an official statement by Apple:
“We are beginning initial production of a small number of iPhone SE in Bengaluru. iPhone SE is the most popular and powerful phone with a four-inch display in the world. We’ll begin shipping to domestic customers this month”
Slow iPhone growth and price-based competition in India
Smartphone markets have become highly competitive in the recent past with Samsung dominating many markets and giving tough competition to Apple. It has been estimated that 25% share of the Indian market is captured by Samsung alone. Additionally, Chinese brands such as Xiaomi, Oppo, Lenovo and Vivo have followed suit filling up the top five slots in the Indian market. Although Apple has seen some growth but due to its high price range and low income levels in India, the growth is laggard. According to official statistics, average handset in India sells at $150.
It was a logical move by Apple to launch its least expensive model iPhone SE in India; selling at a price point of $399 in U.S. However, the price has been cut down by $80 as an entry level price but it is still significantly high as compared to other popular brands. Consequently, iPhone SE has not created a sales buzz in India despite high expectations by Apple.
Apple had been planning to shift its production to India long ago due to slow sales growth in U.S. and losing market in China during the last few years. The company was hoping to capture some of its lost share and gain respite. However, it seems that even if the price of SE falls by $100 in India to $220, it is still way above other brands which offer similar value for money.
Consistent price strategy could become a challenge for Apple
Apple has always maintained a consistent pricing strategy across all markets; which could turn out to be a barrier in the Indian market. However, slower growth in U.S. has made the company flexible in its strategies as it has been following aggressive sales. Moreover, the company is also opting for a low price point to penetrate deeper in other countries. This is pragmatic considering the sheer size and growth of Indian smartphone market that is only getting bigger with time.
Like many developing economies, the actual production of smartphone is still minimal in India as local manufacturing hovers around only 6%. However, the Indian government has been very supportive of Apple’s assembly in India as it will open new doors of opportunities in terms of employment generation and more development for the country.
Source: The Verge