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Apple is failing dismally in the world’s most important growth market for smart phones. India is the largest untapped market for smart phones in the world. There are 1.3 billion consumers in India and only 24% of them own an iPhone.
There is lots of potential for smartphone makers in India.
So how is Apple doing in this must-win market? Apple’s market share in India is a whopping 1%. And to add salt to the wound, that number is down about 50% over the last year.
What is Apple doing wrong? Price is a major problem. After Apple’s latest price hike, its base iPhone Xs is offered at $1,000 and that is with a skimpy 64GB of memory. Take the next step up in memory and you are looking at $1,149.
That is disturbingly expensive for a product that more or less functions as it did when iPhones went for about half the price.
Now consider that in India, discretionary income is a fraction of what it is in the United States. Indian buyers are obviously much more price sensitive and discerning in their smartphone purchasing decisions.
With more than 75% of smart phones costing less than $250 and 95% costing less than $500 in India, there is almost no value to be found in the iPhone at $1,149. The iPhone may be a nice product, but as Indian consumers have told the world, it isn’t four and half times better than the cheaper alternatives.
Apple’s price hike may be a benefit in the short-run, but it is hard to think of a consumer electronics company that has succeeded by increasing price, when innovation and competing prices were falling.
While Apple’s $330 billion market value collapse (about the equivalent of an Exxon or JP Morgan) over the last quarter may be overdone in the short-run, as we see it, the long-term risk to the business remains unfavorable.
The WSJ has more on Apple’s fail in India here.
