Apple in India: a lost opportunity?

99 thoughts on “Apple in India: a lost opportunity?”

  1. Great article Om- and I think you’re on the right track regarding taste: it might just be that the Indian market responds well to “provable stats” (ghz, RAM, screen size). Which as the “phablets”(had to look it up) take to the logical extreme.

    As you point out, there is a conspicuous consumption component to the high end mobile phone market– and you just don’t get any credit for a new phone that looks remarkably like an older model. So I’m not sure duplicating the sleek Apple retail experience is really the answer- it might be too boring for the India market. Think Big Bazaar and their approach to big box retail.

    I think that they have to do the equivalent to what Toyota Prius did in the US market. Go to Hollywood / Bollywood, get absurdly attractive people to be photographed using the phone and make it cooler than Android. Don’t discount the price and limit the number that India will be “allocated”. 😉

    1. I disagree mostly because I think the one brand experience is the key. I went into the Tom Ford store and well, let’s just say, it was reinforced that sometimes “brands” just are too powerful and overcome market realities. (In case of Tom Ford, it was overcoming the obvious problem of pot-bellies.)

      1. Isn’t the main issue that Apple can’t legally create their own electronics store unless they build/assemble a certain amount of their product in India, which they don’t do?

  2. I agree. All my friends in India are more leaning towards Samsung. Desi problem of ‘more features!’

    But yeah, Apple could have created a more exclusive brand by keeping the prices stiff high and open exclusive stores in locations like you mentioned, where money would have just flowed. Heck yeah a color just for India, exclusively available in one of those malls, its a guaranteed money maker!

    1. I suppose the same ‘desi problem’ exists in the rest of the world, including the US, where more people are leaning towards Samsung. If that is true, then it’s not a ‘desi problem’, it’s a worldwide problem. Not a problem, a worldwide preference.

      1. The previous comment I was replying to mentioned that Samsung is popular in India because of the “desi problem of ‘more features!’ “. I was just pointing out that Samsung is popular the world over. Not just in India. So, it’s not really a ‘desi problem’ as the previous comment claimed.

      2. If you’re referring to volume, then yes Samsung sells more units. They have always sold more units. However, data last Q showed that the number one selling smartphone worldwide was the iPhone 5 and the number two was the iPhone 4S.

        Last Q incidentally Apple had higher revenue than Samsung overall although Apple has a much smaller product line and 2x the profit.

        Samsung spends around 3x more than Apple on advertising and that’s probably where this false perception that Samsung is outselling Apple is coming from. I believe last Q was the first time Apple actually had higher revenue than Samsung and the gap in profits in actual $ terms between the two also was the highest.

        So, no Apple sells more than Samsung worldwide if you’re talking about competing products and overall company performance as well.

        As for India, it’s a hobby for any premium brand that exists. There is a small elite that has substantial purchasing power. Most people buy Chinese knock offs and pirate content. Neither iTunes not Apple can make it in India as it stands today. They need to have really low priced products to sell to the mass. It’s a much smaller market for premium products than either Brazil or China.

      3. “more people are leaning towards Samsung” – A S please provide (relevant; fresh) data (in this fast moving market), last I heard (for last quarter, world wide!!!) Samsung G III, was third!!! popular smartphone, with iPhone 4s 2nd!!! and iPhone 5 firs, as measured by sales; google it.

  3. I don’t agree with you Om on ‘badge consciousness’. I think India has an upper (economic) class, but an even bigger middle class, where productivity and affordability come first.

    Also, the buying decision for the average Indian isn’t the same as it is in North America. I am not sure that an immersive Apple store experience will alone do it. India is a highly recommendations and needs based economy, vs. find the best product or best value type of economy. Things like price certainly are a factor, but not in the way North Americans think.

    1. Look like the last half of my comment for cut off:

      So, in short. Yes, lost opportunity for Apple. However understandably, India may not their focus at this time simply due to the cultural hurdle they have to overcome. For example:
      1) The constant mental justification by a buyer/ prospective buyer (sometimes over-justification) of why one chooses any phone – whether Nokia, Samsung or anything else.
      2) Also, things like experience, design and an ecosystem have less tangible meaning in India, and another reason why the Apple store experience, immersive as it may be, will alone not help Apple win. Tangible components such as features tend to rule today.

      And frankly, the Indian govt doesn’t make it easy for multi-nationals to set up shop there either.

  4. – Apple phones are overpriced and under-featured as compared to other phones worldwide. In India the phones that are at competitive prices are 3 year old models. People here are not that dumb. (iPhone 5 costs 50K INR).
    – Plus there is little carrier subsidy here so no one to push it for cheap.
    – Apple doesn’t have a ‘cult’ following here either.
    – iTunes just came to India, still not sure if apps accept Indian Credit Cards.

    Apple is too snobbish to come to India for it’s own detriment, but hey, the consumers here have choices and are happy with it. Whatever Android leaves Nokia can pick up (only if Nokia had the brains to time itself correctly… blunder of not releasing 920 over Diwali)

    1. Sumit, agree with your comments.. Apple devices are too overpriced in India and lags quite a bit when it comes to new device release. With this attitude, there is no way one can avoid Samsung taking over the market..

      Even though, I am an Apple fanboy, it is unfortunate that Apple does not focus on India (yet)..

    2. – iPhone 5 16GB is 45,500. Look out for retailers giving further discounts of up to Rs 1500

      – I don’t know about cult status and all but most of the customers here will buy an iPhone if it was affordable.

      – You could always buy apps from iTunes in India using your Indian credit card like any other international transaction you would do in an e-commerce website. Two months before iTunes enabled to buy in Indian currency as well. Does the new change still support Indian credit cards ? Yes. Source ? Myself who has been purchasing stuff.

  5. “hideous Phablets”. You need to be reminded that in many developing country a person’s smart phone is their only computer….for a host of reasons. So phablets are the device of choice. Add that to the need for devices to be customizable, and the success of these non-Apple devices are a no brainer. Apple products are fine for a certain segment of the market….but they don’t scale well across entire markets.

      1. Not having the choice to do what you really want to do is hideous as well. Having a comfortable screen size to enjoy content without having to pay every time to a forced choice is freedom.

        I can see you love Apple, but having an Android phone with a ‘non-apple-standard’ screen size doesn’t make it any worse.

        Why should Indians pay hideous Apple tax to enjoy their phones?

      2. They may be. Even I thought Phablets were ‘dead on arrival’ when Samsung launched the Galaxy Note I. However, you’ve got to give it Samsung that they have created a new ‘Phablet’ segment and generated a good deal of interest as well as sales for these devices.

  6. Om, wondering if you are missing another element to Android’s popularity. An iTunes kind of content environment is still emerging in India and sideloading of content on to devices (through SD cards or simple drag-and-drop from PCs) are extraordinarily common and popular. Android lends itself very well to this user behavior and consumer need than Apple does, with its extremely restrictive ecosystem. So, just retail presence etc. is not a guarantor of success.

  7. The Apple ecosystem will sell in India, Russia, Brazil, and other countries in time, Apple control of the mobile, desktop OS’s give it an advantage that over time can’t be beat, the iPad Mini with the app store behind will sell big in the world in general. It’s the Microsoft pc’s of the world that have to worry, a cheap pc or something, that runs first world apps. Apple is like In and Out Burger, they will get there (nationwide/worldwide) in a profitable manner on their terms.

  8. Om wrote: “I recommended iPhone 5. But that didn’t impress him — he said, well, it didn’t feel that different than iPhone 4S. When I asked him if he had spent time on it, he answered in the negative.”

    So, the question is if he spent any time with the iPhone 4S. If the answer is yes, then his reason is perfectly legitimate and understandable. What is so different about the iPhone 5 experience compared to the iPhone 4S experience?

    If he is such a “curator of good taste” as Om says he is, then there must be reasons why he bought the Samsung Note, reasons that are beyond just wanting “a lot of features on stuff they buy — more buttons, bigger screens, more memory — more is just better”.

  9. Om,
    Riddle me this. How many senior execs at apple are of Indian descent?

    How does that compare to other mobile or Silicon Valley companies?

    Any correlation to their lack of interest in the country?

  10. Om,

    As you probably are aware, India has a lack of 3G connectivity, nevermind 4G/LTE, that makes the premium price and value of an iPhone 5 not worth it…especially without carrier subsidies.

    Also you seem trapped in the legacy Apple distortion field of everything it does is best, when its devices and software has been lapped by Android, since you feel ONLY with a “church” by way of an Apple Store is needed to sell its products isolated away from pesky competitor products…since when they are embedded with competition in current Indian shops, they are clearly not the desirable or better devices.

    Odd you would describe phablets as hideous but not iTunes…

    1. Well, 4G is of course pretty much non-existant, but 3G connectivity (in big cities) is actually very good, very cheap (I paid $23 for 5 GB of HSPA+ data per month) and, on average, faster than in the US.

      Pretty much everybody I worked with in India wanted an iPhone. They just can’t afford it (the iPhone 5 with 32 GB is around $950, I had several qualified electrical and IT engineers in my project team that did not make that much per month). When I bought my iPhone 4S in India, I posted my iPhone 4 on the internal bulletin board. I had over 400 email inquiries in two hours… Android phones certainly did not get that much interest. So much for “lapped”…

  11. Some time late last year, I read a forbes (I think) article that said it had to do with indian regulations that required 30% of parts sourced from India. I don’t know if that is really accurate, but I assume China also has a framework of a law similar to that, but is not a problem because Apple already uses Foxconn.
    With respect to prices, I wonder if Apple’s strategy currently is ‘those who can afford will import and buy anyway’ and ‘those who can’t afford Apple prices won’t buy anyway’ irrespective of a physical store or not. Given that India has a _huge_ disparity of income, it may entirely be the case that the upsides to a 30% sourcing law may not be attractive to Apple who are looking to keep their margins very high.

  12. I guess I don’t get it. If the upwardly mobile in India want the best phones, why aren’t they willing to pay for it? Why does Apple have to make a cheap IPhone?
    I’d like to get the best for cheap to.

  13. Here is an indicator that I would like Apple to pay attention to — compute the number of Mercs, BMWs, Porsches etc sold in India to the number of iPhones sold; and compare that ratio against similar ratios for the US and the rest of the world.

  14. Apple will enter India when they are ready, they have never worried about being first, they focus on being better, and by better I don’t mean specs, I mean a better overall customer experience. Humans don’t care about specs anymore, only a small number of nerds care. But of course those nerds will insist that everyone cares just as much as they do.

  15. Kind of disingenuous to claim “2nd largest mobile market” while glossing over the fact that the smartphone market is only at 25 million users.

    The Shangai AppleStore probably services that many iPhone users alone. Developing the infrastructure to have AppleStores in Mumbai, Bangalore, and Bomay would be a massive expense just to get a million or so users… Would it help increase that userbase from such a small number to something greater? Sure, but so would another Vancouver (or whatever random city that already has a bigger Apple presence) store.

    1. Tim

      That is assuming that it will sell only iPhones and not other iDevices, which is another big opportunity for the company. There is room for a lot of sales here. Even 5 million iPhones at $400 a device, works out to about $2 billion – not something to sneeze at.

      1. No, that’s assuming that in a nation of 1 billion people that only has 25 million smartphone users, there probably is not the development for a substantially larger market for any other devices either when those devices get their power (apps, internet content) from the web. In India you are more likely to get internet access from your phone (again only 25 million users however) or a cafe. Without a data plan, iOS device users are greatly helped by wifi — but I’d bet that wifi numbers are pretty pathetically bad in India as well.

        1. Tim

          I will make one simple observation – that 25 million number is still bigger than the population of Netherlands and thus to my argument – that India does merit one or two stores.

          Regardless, there is a lot more wired broadband connections today than a few years ago. My parents are using Broadband (WiFi) and iPad (which I bought for them in the US) to do Facetime with their kids and grandkids.

      2. No, actually. A simple potential market size to store ratio comparison between the Netherlands and India does not compute. How do the regulations of foreign-controlled businesses compare? What are the import/export tariffs? What are the requirements for domestic production? How does the stability or corruptibility of the government compare? Risk of terrorism? Past history of users? Infrastructure to support a local workforce? Etc.

  16. One thing that stands out very clearly, is the lack of Apple Stores in India.

    “iDevices get lost in a confusing array of phones in a multibrand dealer shop”, is the very reason why Apple Stores around the world make so much difference to Apple’s sales, revenues and profits.

    Is Apple being ignorant by not opening a few Apple Stores in India? I am not sure.

    The reason (I guess) why Apple hasn’t done this, is the Indian regulations barring 100% FDI in single brand retail.

    IMO, Apple would rather lose the market share to Samsung in India, if the India market is not resulting in a comparable (to other markets) profit share.

    1. a. Indian regulations permit 100% FDI in single-brand retail although it comes with some caveats
      b. There are at least two retailers in india which actually have Apple-exclusive formats – Imagine and Reliance Retail’s iStore with a presence in top 10-12 cities and multiple stores in the major 4-5 cities. If Apple was indeed serious about retail as a driver of brand and customer experience, they can easily partner with these players to create it without having to put in a lot of their own investment OR having to figure out regulations.

  17. I think there are two reasons, one which may not be addressed here and the other I agree with Om. For one reason, everything about AAPL is closed, I mean, the iOS, App qualification etc as contrast to Android. It is is not that a common man would differentiate but I think that is the mind-set and secondly, the brand, Indians tend to look for house-hold
    brand, like I mean, Samsung is a brand in India not only know for Phones but pretty much
    for other electronics too, like TV and refregirators. An Indian household which owns an
    electronic item is more inclined to buy another electronic item from the same brand, I feel
    Apple has lost it totally in this aspect.

    1. Agree N. Indians tend to buy what they are already familiar with and/or based on strong recommendations (vs. a great experience). Needless to say, it doesn’t matter how amazing Apple’s iphones are — until they reach a certain tipping point at which time they are ‘proven’, they will not win against the Samsungs and Nokias of the world.

  18. It’s not just Apple ignoring India, it’s also about Indians not accepting iPhone. A few years ago people didn’t know why they needed iPhone, for lack of awareness, now they don’t know why they need iPhone because they have Android. If you think mega rich and brand conscious exist only in metros, then you really don’t know India. My hometown is a suburban Industrial city that is a biggest market for Mercedes outside any metro area. You sit outside a cafe and watch all the latest models of cars zoom by any time of the day. International travel was a status symbol even before IT explosion. After coming to USA it was hard for me to accept the fact that many Americans struggle to make their car and home payments.

  19. Good insights, Om.

    My sense is that Cook wants to focus on Rio & Sao Paulo, initially, given the upcoming World Cup & Olympics there, in 2014 & ’16. Good way to enjoy a multiplier effect with global events, tourism, etc…

    It should also be pointed out that Ron Johnson’s departure to JCP and the Browett fiasco could only have hindered Apple’s retail plans. I think it really hurt, actually.

    While I’ve had similar conversations with family in India & Brasil about switching to Apple devices, you’re right that walking into Apple Stores (& getting Genius advice) changes everything, and once they own & experience their first device, it’s a revelation. (And issues like side-loading give way to awareness about Dropbox & iCloud and other elegant options.)

    Yes, prices are higher given currency exchange & import tax, but there’s enough people with a huge amount of disposable income in all BRICS areas…but note that value (& resale) is quite high with Apple devices, as well.

  20. Here’s where I don’t agree with you. Yes, Apple caters to people of taste and has a premium standing. And in India many really affluent people have no problem buying the phone. But. Apple’s stance almost everywhere it is really successful has been ‘affordable luxury’, not exorbitant luxury like Chanel, Burberry, Armani or others in Emporio. If it was, Apple wouldn’t be doing the numbers it does. And so I don’t agree that Emporio, much as I love that mall, will be the best place for an Apple store.

    Many people who would really like to buy the iPhone can’t coz it is just too damn expensive for a phone. So, in an ironic way though, Apple’s stance, unwittingly, in India is like the premium brands in Emporio, but that’s not what Apple should look to keep.

    I did not upgrade from my iPhone 4. Part of the reason was that there wasn’t really anything that compelled me to the 5, but the price totally put me off from even considering it. I own a MBPr and an iPad 3 so it’s not that I can’t spend the money, I just find it ridiculous to spend that much on something that can be lost or damaged as easily as a phone. I know I’m not alone in this point of view.

    My younger brother who is studying in the UK now wanted a new phone but did not think of getting the iPhone 5 here because of the price. Within a week of landing in the UK however he bought one, coz of the carrier subsidy.

    Most of the high end Samsungs that sell are a good 10k cheaper than the lowest cost new iPhone. And they drop in price every few months, which the iPhone does only once a year.

    The iPad is priced really well and I see that everywhere now. In colleges, at friends’ and relatives’, in malls etc.

    Also, did you have a chance to visit any of Apple’s premium resellers’ stores like Imagine, iStore by Reliance, Maple etc.? They are ofcourse nowhere near ambitious as Apple stores and don’t carry with them the face of the brand, the culture and the appropriate message but they are still pretty damn good as far as stores go.

    Samsung’s marketing does play a huge part for people like J J to not buy the iPhone but for the iPhone to be really popular like it is elsewhere, it has to be priced right.

  21. Good points. I think the main reason however and something I believe either Jobs or Cook hinted to in an interview (can’t remember which one) is that business in Russia and India is not up to Apples standard. I think China and Brazil have gone to great lengths to remove any obsticles in a foreign multinationals path. Whereas Russia and India have very deep systemic issues (namely corruption) with the way thier policies are approved and created and are not conducive to business. I believe Apple is just taking a moral stand on this issue where many other companies have caved and started playing by India’s/Russia’s rules.

  22. Well, I have been working and living in Mumbai for the last two years and think there are some relevant points to be made… (I hope):

    – Even the well-earning Indian people (I’ve met, and some of them were filthy rich, I mean the kind of family of three occupying a 12-level building right at the beach alone kind of rich) are extremely price-sensitive. Thanks to ridiculous import taxes, people bring in a lot of stuff from abroad. Apple (without moving some production to India) would have little chances to offer better pricing.
    – When going to places were a lot of rich young Indian people hang out, like the Four Seasons roof top bar, or the weekend disco at the Juhu JW Marriot, you did almost only see iPhones and iPads, eventually a Galaxy, but certainly none of the local brands. I assume Apple’s saturation among the wealthy is a lot bigger than what local sales would suggest.
    – When going to (expensive for most locals) coffee shops (like Gloria Jean’s, Lavazza, Barista, Coffee Day, etc.), at least 80% of the laptops “on display” were Apple’s. Again, I think the saturation is a lot higher than local sales indicate.
    – The requirements to partner with local strawmen to do business in India has inhibited Apple stores and even an online store so far. I do not see Apple making a move before that changes.
    – Some of Apple’s resellers (like Maple, iStore and imagine) are quite good, reliable and knowledgeable – there is little an Apple operated store could do better. As long as you avoid shabby and clueless outfits like Croma and Unicorn, you can find pretty good service in India. I have pre-ordered the iPad 3 and the, then new, 15″ Retina MacBook Pro while in India, and both things arrived exactly on their respective launch days, complete with a local “genius” who did the initial setup, transferred data from my old computer, etc. I have nothing to complain about.
    – Some very nice local shops are already in premium locations (like the iStore in the Palladium Mall, or the Imagine store at Inorbit Mall, and they are definitely busy). An own Apple store would simply kill these business and replace them with, mostly, the same.
    – The local telcos are not doing a bad job. I bought my iPhone 4S through a pre-order on Airtel’s website and received it exactly on launch day. Unfortunately it had a manufacturing error (home button dead). One phone call to them and they replaced the unit next day. Can’t complain about that either. I don’t think Apple could do much better than that.

  23. Great article, Om. I agree that Apple has failed to provide the ‘experience’ of an iPhone 5 to a large number of people here. I wrote about it here: http://www.bhatnaturally.com/apple/iphone-5-india-launch-the-experience/. But that’s possibly changing with a slew of EMI options made available on the iPhone 5 & advertised heavily. Overall, I am not too sure if India is ready to be equated with China in terms of potential. China delivered $6.83 billion in revenue for Apple in Q1’13. India is largely a value conscious market with negligible Apple ‘halo’.

    1. There are EMIs being offered on iPhones in India?! Geez, then Indians will soon turn into Americans as well – living off their credit cards.

      Although my bet is that the majority of Indian is still ‘old school’ (in a good way) — they buy things if they have the cash in the bank. Whether that be a $700 phone or a $700,000 home.

  24. Emporio mall would be the right place Om….. Apple needs space to create an iconic store… 10,000-15,000 sq feet ….. You won’t get that space at Emporio!

    Apple can be an standalone store anywhere in Delhi…. “Build it and they will come”….. N I know the perfect place for it 🙂

  25. Om, not only Apple even Google is ignoring India in their Nexus launch and availability. Atleast you can walk into many shops and buy Apple products. Apple has also failed to create India specific content as part of their eco system. What is the use of just launching Apple stores or the products when it’s all US centric. One of the reasons Android is successful because, atleast on the content front, Google has created huge India specific content. It’s not just opening the stores in India they need to think of the whole eco system.

  26. Apple’s premium brand message to developed nations seems to be “Look we do not sell these great phones to Indians and Africans because only you deserve it”

    1. I do certainly understand when people are unhappy about not having Apple stores available, but interpreting that as discrimination goes far too far.

      Sorry, but India is a difficult place to do business. Period. My company is a (technology) consultant to almost 20 European companies that do business there, and more than half of them consider “packing up and going home”. Not because of the Indian people in general (not at all), but because of infrastructure, complete arbitrariness of rules and regulations and how they are applied, customs madness (having urgent spare parts rotting in customs for three months without even a notice was the norm, not an exception)… etc ad inf. My furnished apartment in Mumbai was $4k a month and I had repair mechanics (herds of them) in it at least three times a week for two years, most of the time till after midnight – nothing ever worked more than a few days.

      I do not mean that in any bad way whatsoever, and I certainly prefer India over China (when it comes to living there) any given day… but India’s got to change. A lot. One can only do business in a place that is, to some degree, predictable. And the government in India is simply erratic, the language and education situation is a nightmare and the cost of doing business is uncontrollable… every time you finish a calculation or plan somebody is jumping up from behind a bush and presents another obstacle, or wants to negotiate something else entirely. That does not happen in China, not in Thailand, not in Korea, not in Vietnam, not in Brazil… heck, not even in Russia (and they could teach all of us something about corruption).

      One of the first steps: get rid of that god-damned and useless protectionism. You can’t protect yourself by outlandish import taxes (and a complete set of goons to enforce them randomly). If you want to support local businesses (and nothing’s wrong with that) give them subsidies, tax breaks, cheap real estate, whatever is needed – but do not shield India from a free flow of goods.

      Do you think it is only Apple? Really? About half of the world’s luxury watchmakers do not sell in India (at all). About 80% of the world’s luxury makers of household items and furniture do not ship products to India, none! Some international brands get their reputation destroyed in India by a level of price inflation that is approaching criminal territory. Why does a Hugo Boss shirt or a pair of Timberland boots cost as much as 300% of what they cost elsewhere? Why does an Italian espresso machine cost as much as 600% of the European price in India? Protectionism and the few minions that were allowed a way around it… Something is a problem there. It is not Apple.

  27. Om, with Siri and Maps virtually of no use, there is less incentive to buy the new versions of iPhone in India. Having said that, if aunties at kitty parties bought Blackberrys to merely flaunt it, not use it, can’t see why the iPhone can’t sell. In fact, just that might be happening. In the last quarter of 2012, Blackberry lost market share and the iPhone gained.

    bala

  28. In a country where 50% of the population is below 25 a whole whole of them employable, apple would be an aspirational brand. even if 25% of 500 Million can afford an apple phone, that is 125 Million people….apple needs to have a perspective on what they are missing. Samsung will beat them fair and square because they have invested here and people seem to be really happy with the range of price points on offer (10K INR to 35K INR for smart phones)

  29. I totally agree, since I’m launching an app called Circle Plus payments soon this year a mobile payments app with proprietary technologies to accept credit cards for anyone with a smartphone later this year, our first launch will be on Android as its a majority of the market and what a majority of the poor use. However, what’s interesting is that a large majority of iPhones coming to India are from abroad and NRI’s returning or people gifting iphones while visting and a major point about why Apple doesn’t do business in India is the fact that you have to pay 5 different people to do retail at various levels. Now that single brand retail is allowed Apple should open a store or heck allow people to franchise, franchise’s know the local market better, heck you know it better than all the goons at Apple that brand themselves as executives how to sell this. Opening a few flagship stores at major high end malls would be free advertising and create this hype like you said.

    I totally wish apple would succeed, it makes it easier as a developer to write one app and scale it on iOS than 150 different versions of android devices to optimize for haha.

  30. wow, Om! This was really condescending! “hideous phablets” “more is better”

    You seem to suggest that many Indians do not have good taste as they prefer samsung vs. apple and apple needs to educate them! The upper class in India who can afford an iPhone are actually very well aware of apple and their phones (just see how a dominos/taco bell/pizza hut automatically gets brand value in India as they come from the US). So, how do you explain the lack of traction of iPhone? Poor taste of Indians and that Apple needs to educate them, when they are very well aware of it? Hell, no!

    Isn’t the journalist supposed to reflect what customers prefer rather than saying “these stupid people prefer bad products??” Why the condescension? Just because the US customers prefer something, it does not automatically reflect that it is a better product.. For example, US has the worst healthcare and continually votes against changing it.

    Do you know the main reason why iPhones do better in the US than elsewhere? It all boils down of the carrier subsidies. If you take out the carrier subsidies, Samsung/Android phones are a much better bang for the buck than an iPhone. And, carrier subsidies don’t exist in India. iPhone costs more than 50,000Rs and I can get an S3 for 35,000Rs. Do you see the difference? Not to mention, the app community for India is built for Android-first (the same advantage valley media gives to iPhone in the US).

    Please don’t treat people like idiots and see everything from the perspective “oh, iPhone is so fucking awesome, so why aren’t people using it in India?” and see if they are really that awesome in the first place?

  31. Couldn’t agree more with you Om. The most obvious indicator of the Indian “brand aspiring” psyche that the smart folks at Apple have overlooked is the number of unlocked iPhones and iPads that have been bought at Apple Stores in the US by Indian visitors and by US residents such as moi for friends and family back home

  32. Apple has made it clear its on a 2 year upgrade cycle, which means the trickle down effect of new development will barely go beyond current and the last generation of iPhone when iPhone 5S or 6 is released. Even when this happens iPhone 4S will be barely breaking the 40K ruppees barrier. Spending 40K rupees, on something you know you need to update in 2 years is kind of a behavior which is not yet considered normal but rich kid behavior. So even in a middle class where there might available disposable income – iPhone is not yet there.

    Second argument against Apple in India is about the Appenomics – Android is selling ad supported apps while Apple is outright selling apps. The need to have a credit card, plus buy each app that you use is still kind of non-existent. Not just me, but most Indians I know, middle class, will always budget Phone Cost + Min spend on Apps to make the phone functional as the total sunk cost in hardware.

    In India operators do sell iPhone – but not at discounts but full retail price of 45k rupees or more!

    So until Apple starts providing a start kit of apps or figureout how to complete with Android flagship like GS3 which launched at 36K rupees a cool 9K less than iPhone 5, I guess Apple will still struggle.

    In China and Brazil – the per capita income is higher, there is higher level of disposable income available, service industry in these countries is way of more mature and people are used to pay for servvices, which means they don’t mind paying a really good app/service! So it was relatively easier for iPhone to break in…

  33. Brilliant article

    * Release Date
    This is my main peeves with Apple. they release it so late in india that it is already old. If you want to own the latest then samsung is the best bet. and that is what is happening. october release reaches here by december. last launch was better but then only white model, only black model bullshit.
    distribution definitely got to be faster. it is clearly ignored.
    The new iMac isn’t here yet, i mean c’mon. why would i buy 1 year old models if new one will release in 1 month, I’ll feel cheap and ignored. it feels as though they are sending defective materials to india after they are done with it.

    * Price – I agree with you on the price point, but iphone came in only 1 variant in US without any carrier plans, it could never have been as successful. average americans are also cought up in Mortgages and think twice before shelling out hundreds of dollars. IPhone in india could do a lot better if carriers offered better PLANS and not EMI.

    even If i do buy on EMI right now, the 3G costs or LTE costs are still very high, why on earth would I go for a plan that is clearly gonna bleed me more just because I’ll own an iPhone , need better subsidy?

    * Music
    english music is much easier to purchase and cheap in US. 1$ is like a cup of coffee. 1$ song in india is like paying 10 cups of coffee in a local shop. not to mention most of bollywood songs never show up or show up too late.

    * Maps
    don’t even get me started

    * SIRI
    Evertime i use it, is says sorry this is not available in india. I Paid for the service just as anyone in US.

    * anything wrong ? – the shitty apple care guys have no clue.

    their ignorance is costing them profits, but i guess they have it plenty so they just don’t care.

  34. Om whatever Apple’s strategy is in India the price tag of 44,000 carries for the iPhone 5 is simply ridiculous. Indian’s love their money and are ready to compromise a great extent to save a few $$$. Now the iPhone’s largest competitor like in every part of the world is the S3 which is priced at 31,000 offering a lot more features or even the Lumia 920 which is a sell out in the Indian Markets for just 36500.

    Apple needs to rethink it’s pricing strategy,it will help it grab a way larger market share with that.

  35. I tend to disagree with you. It’s not just about being a big mobile market it is also about use cases, utility value, appreciate for tools that help productivity, willingness and income to pay and finally an infrastructure in place to enable them.

    On Infrastructure: There are only 20M credit cards in India with about 11 transactions per card per year (China has 200M credit cards). The 20M number has hardly moved in the last 5 years. At a very basic level charging Rs50 one at a time is very costly affair.

    Utility (related: understanding opportunity costs – and willingness to use tools to solve day to day problems): A mobile phone in India is primarily bought for voice and SMS and people who spend money on higher end ones are buying a fashion brand rather than a utility device. An iPhone (or Android) in the US and developed is the means by which to consume the apps for everything from driving directions to music to reviews … the list goes on. An average consumer in India is still extremely price sensitive (also, pay scales are low), has not seen technology play a big role in daily life and therefore there are many behavioral barriers to extracting value out of the app ecosystem. Android comes with a ton of free apps and that is therefore far more attractive.

    I’ve lived both in India and US and do business in both countries; I own an iPhone and form my observations I just don’t see India as being an iPhone market. iPhone’s will be bought primarily as a fashion brand in India. Of course there will be pockets which look like any other urban demographic around the world, but that market is very small. At scale, I think India will be dominated by Android.

    (If you get a chance, take a look at “How GE Is Disrupting Itself” in HBR by Jeffrey Immelt – the money quote from it: “With far smaller per capita incomes, developing countries are more than happy with high-tech solutions that deliver decent performance at an ultralow cost—a 50% solution at a 15% price.”).

  36. Also, on Samsung: it is a very familiar brand and has taken a holistic approach to branding in india – from appliances to phones to TVs …. everything. It has service centers everywhere and advertising in one category feeds into others. Big conglomerates with multi-brand distribution win in India (for reasons that are hard to explain in a blog comment!).

    And I do think you are being over-simplistic in suggesting the investment in Apple Stores will turn the tide. Really, it is far more complex.

  37. Om, it seems that you are asking to focus more on India against their pitted strategy. Well! you didn’t mention why exactly? The numbers are against India. There may be rich people who can afford to buy Apple, but that doesn’t mean they will buy. It doesn’t seem logical.

    Well…I do agree with you that Samsung has taken the Smartphone market by storm, but then Samsung is there in Indian market well before even iPod was born. And Korean company is well now stage of maturity.

    BTW, I liked the idea of opening iStore in DLF mall, but certainly there’re better places that DLF Mall. Cheers!

  38. Isn’t Apple limited by India’s foreign direct investment policy when it comes to opening Apple Stores there? I read that the Indian gov’t is starting to change that, but before Walmart and Coca-Cola find a way to open stores/build bottle distributors, it’s pretty unlikely Apple open any stores in India.

  39. I was in a small village in India for a social occasion and I’ve seen tons of Apple devices, most of them imported from the US due to the lack of quick releases in India. I see tons of users but all of them suffer due to the lack of localized services like Siri or the much criticized Apple Maps (when GMaps app wasn’t out).

    At the same time every time I visit the “iStore” retail chains owned by Reliance Digital, it makes me vomit. They’re that de-motivated.

    Apptronix changed this trend a little in Andhra Pradesh.

  40. I think Apple avoided India because:

    [1] lack of 3G capacity & coverage & subscription (2% of mobile users…)

    [2] lack of high speed Internet availability (i.e. where broadband means 3G data…)

    *** China had Huawei that built huge communication infrastructure …

    *** Without good 3G & broadband, iProducts are useless … (no connection to iTunes…)

    *** There are many, many 2G Android product …

    *** Or India carriers disliked Apple’s terms…

  41. A key element of Apple’s success in the US has been the apps that lend tremendous value to users in a local environment – booking tables, finding places, tourism etc. With the lack of penetration of data connectivity to smartphone (a very small percentage of smart phones in India have data connectivity plans – used either via Wifi or as simple phones) and you see this with rich housewives flaunting latest iPhones, but using it primarily for voice and text (not even email). The penetration of 3G/4G is minimal in non-metro areas combined with lack of apps that are relevant to the local Indian context is a key inhibitor for Apple’s success. On a side note, Indian TELCOs have screwed up the entire developer marketspace for feature phones by demanding 60-70% of the revenue for VAS services as opposed to the reverse in other countries. The Appstores and GooglePlay dont allow Indian TELCOs to do that thankfully.

  42. I agree with you that Apple is yet to create the in-store experience that allows Indian consumers to touch and feel the device before they buy it.

    Another issue that I see is that there are few / no providers who have a contract based approach to selling mobile phones, which is pretty common in the USA or the UK.

    Yes, you can tap the rich consumer to buy the iPhone 5, but for an average consumer to shell out INR40,000 for a phone is a big ask.
    Especially when you have cheaper Samsung or other Android based phones which provide most of the functionality they need.

  43. From Apple’s point of view, it is more than just the market size. I’m assuming regulatory and tax hurdles may be weighing in CEOs’ mind of the companies that want to establish in India. Look at the recent mess created for telcos. What companies want is not democracies and large market sizes; they need certainty and stability. From that point, Apple may be right to continue to adhere to their current business model.

  44. I totally Agree with OM, and as a keen follower of trends wants to put certain facts here:

    1. When Apple was not selling official iPhone in India , India was one of the biggest market for unlocked phones

    2. Apple started selling in India through service providers and with restrictive strategy they had apple stil was preference for most of the tech savvy people

    3. Since the time Apple started selling through distributors and putting adds in news paper shipments volumes have reached to levels OM has show cased

    4. I know friends who went to buy Android tabs but when they saw Apple Mini for 22k they bought that on a premium of 7-8 K from Samsung Tab

    All of the Above happens because users realises Apple products are worth the premium but Apple is ignoring this market and pushing it into Android hands why following actions

    – By not supporting Indian English and Hindi on Siri and I know they can easily support it because Nuance has a very good Support for these languages and Siri is one major differentiator from Android

    – By not creating a user experience as mentioned by OM

  45. iTunes is the issue.
    It’s the gateway to the whole Apple experience (store, apps, etc.)
    And if you don’t have iTunes in a country, it becomes very difficult for Apple to make its products relevant.

  46. Om, I agree with all your points here, but have a few ti add myself, being that I am in the business of selling phones myself.

    1. You bring up the point of Apple stores only in the metros. This is all fine and even when Apple does get around to it, I am sure they will follow the exact methodology of opening stores in posh localities. But tell me this, all the stores in metros included, how many million phones do you think they will be able to sell?

    2. They do have a branded in store presence in chains such as Croma and Reliance Digital. But again, the sales from these places is hardly in the thousands.

    3. A good thing that they have done is introduce EMI schemes, but here again the sales are limited by people who have credit cards, the numbers for which is very low. I think it might be far fetched, but an Entity like Apple Finance seems appropriate here, so they cut out paying the banks in the middle.

    If you ask me, what Apple needs to most is bring out models specific and exclusive to China and India. I know there has been exhaustive discusion about this in the press, but I feel it is inevitable. Only then will they start cracking the numbers. This will in turn lead to the halo effect and sales of other products will also go up.

    This is just my humble opinion, woud love your comments on the same. Here’s hoping for the best.

  47. Agree with you on the Apple store experience being a huge selling point for the devices.

    The main reason Apple does not operate stores in India is the requirement for FDI by the Indian government that 30%(if I remember correctly, under certain conditions it may be reduced to 20%) of products and materials for a single brand retail multinational have to be sourced in India. Even if Apple sources a ton of accessories in India, it cannot hit those numbers. The only way to hit those numbers is open factories in India to manufacture Apple products, which is certainly not a good investment from Apple’s point if view.

    That being said, here in Mumbai, there are certain Apple franchises who try to approach the Apple experience in terms of store layout and customer service. But imitating the master is not an easy thing. 🙂

  48. You know you basically said clearly why noone should by Apple – overpriced elitist badges. They sell fashion not technology. Why don’t you rewrite your article from the perspective that Indian consumers are smart because they buy on spec not fashion?

  49. I think you should rewrite this piece from the perspective that Indian consumers are smart for buying based on spec and not fashion. It’s great they are not all elitist drugged Apple fan boys like you.

  50. Om: Though it is 100% FDI in single-brand retail, Apple will be forced to procure 30% of what it puts up for sale to locally produced. Tell me what will Apple produce or procure here?

    May be they can ask Foxconn in Chennai to produce iPhones 🙂

  51. I think you missed one cruical point. Apple cannot open stores in India even if it qualifies as a single brand retail chain because of the stupid restriction that the “investor has to source 30% of the product value” from small businesses.

    http://articles.economictimes.indiatimes.com/2012-01-14/news/30627664_1_single-brand-product-retail-trading-single-brand-fdi

    Single brand 100% FDI is just dead on arrival as far I am concerned as it would be impossible for a brand like Apple to comply with the regulations as it stands today.

  52. No career subsidy => No Apple. Anywhere.
    No one is going to pay 50K upfront for a phone. That is why Apple is planning on providing EMI facility in India (or is providing?).

    Also, India is a land of Pirated Apps/Music or No Apps (yes, you heard me). Since Apple makes a lot of money from purchases linked to it’s devices (iTunes), it sees a very LOW ROI in India.

  53. Om, I really liked the intent of your article. There is definitely a perception that Apple is ignoring India. Being an Indian admirer of the Apple experience myself, I too find the Apple approach frustrating. However, thinking as a manager, their strategy makes complete sense to me.
    The first major drawback of India as a market is that it is far from homogeneous. People not only have different ideas about what they want to do with their phones, but also speak in several different languages (20+ official, not counting innumerable dialects). From a development aspect, integrating the Apple experience with so many languages is a monstrous task. China in this aspect is a much more simple mass market. In my knowledge the complete apple experience is delivered in very few languages. The market of English speaking Indians who’d use the complete Apple experience is very small (App stores and itunes store is a major revenue source).
    Even if there are 26 million smartphone users in India, my optimistic guess of the number of 3G data users is around 2 million. Since 3G spectrum were auctioned at very high rates, it ensured that high data consumption is well beyond the reach of most. In fact, even though Android devices are outselling iOS devices, iOS devices still consume 80+% of mobile data traffic around the world. Apple makes major bucks not only from people buying the phones, but also from what people do with their phones.
    The last thing that comes to mind is the legal issue of a foreign retail brand opening Indian stores. Indian regulations require sourcing a large fraction of their sales from within India. If I simplify Apple’s business to hardware, software and support services, India has an economic edge only in software development. The question that comes to mind, is how much does an apple user pay for apple software (iOS and Mac). Since the answer is next to nothing, Apple has no idea how to even begin to start shop in India.
    Sorry about writing so many words, I couldn’t make my point with fewer words. Thanks for your patience. 🙂

  54. I could not agree more on Apple’s retail absence in India!!!

    Here is a guy who stood in line for 14 hours to buy the iPhone 4 the day it was launched, another 5 hours to buy the first iPad, and to top it up, he never missed buying ANY Apple product since June 29, 2007 (the launch of the original iPhone). Not because the iPhone was a fad, but because it was revolutionary for him and since then every new Apple device made his life only better, an internet in your hand, palm, desk like never before.. What he assumed was his addiction for life, hardly did he know that his decision to move to India from the US in mid 2011 was the antidote to this love disease. Ever since he moved, he hasn’t bought a single Apple product.. Not because he doesn’t need it, but because he doesn’t want to…

    That’s the power of an Apple Store!!

  55. Steve Job hated India as he had suffered bad experience in India during his stay in the earlier part of his life. He, therefore, excluded India from his worldwide plans. Singularly it is the greatest loss to Apple and likewise to India. Hope the new mangement of Apple realizes this and makes amends for mutual benefit.
    -Wg Cdr Ravindra Parasnis

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