The smartphone market in China, the world’s largest market is saturated and manufacturers are beginning to consider other “untapped markets”. India is the worlds second largest smartphone market and it is also considered as the “the world’s largest untapped technology market.” As smartphone sales in the US and other markets tend to stabilize, Apple is said to have turned to India for new growth but has made very little impact so far.
According to Wall Street Journal (WSJ), only a quarter of Indians own smartphones and this provides an opportunity for Apple to sell iPhones to millions of new customers in India. The problem is that India is a price-sensitive market where more than 75% of the smartphones sold in the country are priced below $250. Apple licensed dealer Flipkart sells iPhone SE for about $250 in India, but other models of iPhone are priced between $325 and $1950 in India, much higher than many Indian consumers can afford.
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WSJ explained: “The core of the problem is that Apple is reluctant to change its traditional business model for selling iPhones. The company prioritizes the production of a limited number of expensive products, a strategy that revived the company after it was on the verge of bankruptcy in 1997”. Compared with 2017, the number of iPhones sold in India has dropped by 40% so far this year, and Apple’s market share in India has also dropped from about 2% to around 1%.
The Indian government’s policies have not provided Apple with the help they want. For example, Apple faced difficulties in opening its first retail store in India, as the country requires that at least 30% of the manufacturing materials for single-brand must come from Indian suppliers. Despite this, Cook is still optimistic about Apple’s future in India. Cook said in a recent Apple earnings conference that Apple has had a very productive discussion with the Indian government and will open a retail store in the market in the future.