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How Apple loses its grip on the Indian market

Software Engineer Samee Alam was ready to take the big language and buy an iPhone in this week's Diwali festival…

Software Engineer Samee Alam was ready to take the big language and buy an iPhone in this week’s Diwali festival sale, but in the last minute he chose cheaper Chinese competitor OnePlus instead.

Alam, 27, spent hours on his phone watching shows, surfing and shopping, making him the perfect target for Apple Inc., as it aims to raise sales among India’s 1.3 billion consumers.

But in a country where the average per capita income is about $ 2000 (about 1.44 lakhs) a year, even the cheapest of this year’s new iPhones, XR on Rs. 76 900 ($ 1,058), cost twice as many of the options.

Hong Kong-based Counterpoint Research says that iPhone sales fall as a result. From three million phones in 201

7, sales can fall to two million this year, according to their estimation, the first decline of four years.

More than half of sales came from cheaper older models and the lack of progress in India was among issues cited by Chief Executive Officer Tim Cook when he gave a disappointed holiday view last week.

In the premium segment, Apple also hit Samsung and China’s OnePlus in smartphones that cost over $ 400 (roughly Rs. 29,000) in the third quarter.

“I’ve never used an iPhone and I was keen to get my hands on one but it made no sense,” says Alam, who works for one of the fleet companies to have invested in the southern city of Bengaluru, commonly called India’s Silicon Valley.

“I’m looking for storage, camera and processor on phones and cheaper options like OnePlus is more value for money. The new iPhones cost almost Rs 100,000 – I can get three good phones at that price or even a dece nt gaming laptop. “

Solid Mac sales and the high unit price on iPhones meant Apple’s $ 2 billion revenue in India last year was twice as large as OnePlus, which only sells mobile phones. But Counterpoints data says the gap will also shrink.

OnePlus Director Vikas Agarwal told Reuters this week that 10-15 percent of new customers have been Apple deficiencies in recent months, indicating that some loyalists also choose to upgrade their

High Import Customs
Apple’s problem goes beyond price.

The company, angry with a handful of regulatory headaches, lost some of its senior executives in India at the beginning of the year. 19659002] An Apple spokesman said that the departures had nothing to do with the company’s performance, but people familiar with the case told Reuters that the departures were probably linked to the company that switched distribution systems. Apple has lowered the number of distributors in the country to two from five.

The sources, which were found to be identified because they have business relations with Apple, also said that company veteran Michel Columb is still working on strengthening business relations since taking control of the Indian operation in December.

Apple refused to comment further.

Prime Minister Narendra Modi’s government has attempted to drive electronics producers locally through continually moving tariffs up the supply chain from simple telephone cases to sophisticated chipsets and boards.

Along with local companies like Lava, global smartphone giants, including Samsung Electronics Co., Oppo and Xiaomi Corp, responded aggressively and invested millions of dollars in plants around Bengaluru and Delhi tech hub Noida.

Apple is the only major player who does not make phones in the country and it only assembles two low older models through Wistron Corp. in Ben Galuru.

Industry experts say that the company still imports about 70-80 percent of their phones. This leads to high import duties, which in turn makes the phones expensive.

In the US, the basic iPhone XR model costs $ 749 or about 54,400 rupees, only two thirds of its price in India. In addition, while US phones are subsidized with wireless carrier offers, Apple’s phones in India are not.

“Apple does not have enough confidence in the Indian manufacturing system right now to set up plants and move some of its manufacturing out of China,” says analyst Navkendar Singh of Technical Consultancy Company IDC.

“In the process, they lose about 15-20 percent of their tax incentives … which they could have forwarded to the consumer.”

Empty Shops
Diwali, Festival of Lights, is the highest sales time for electronics in India, but the Apple licensed store in one of Bengaluru’s major shopping malls was abandoned this Saturday.

“The features of the new phones are similar to an iPhone,” says salesman Aejaz Ahmed, and volumes have fallen in recent months. “It’s very hard to make the difference as they even look alike.”

Sales staff at several stores in Bengaluru and nearby Chennai pointed to the launch of the latest OnePlus phone this year as a major issue for the American phonemaker. At 37,999 rupees, the Chinese company’s 6T is half the price of XR.

The result says Neil Shah, from Counterpoint, is that Apple’s user base in India will decrease by about 10 percent to nine million users this year, compared with an estimated 436 million Android users.

“If your user base is reduced, you lose your grip on the market” , he says. “The new customer base will not come.”

© Thomson Reuters 2018

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