The festive season in India is in full swing, with the country celebrating Diwali, the festival of lights. Diwali is one of the major festivals of the country and is marked not only by the colorful rangolis, lit-up homes, and firework celebrations but also by the rush of purchases by Indian families in the preceding weeks to celebrate the auspicious occasion.
Of course, this shopping frenzy does spill over majorly into the smartphone market. Smartphones are important purchase decisions for Indians, thanks to a combination of factors like low per capita income, purchasing power parity, low device turnover per person, and the increasing prices of smartphones in the country. So when a company like Apple starts losing sales in a country of 1.3 Billion people, despite the shopping rush, it warrants a closer look at the situation.
According to data from Counterpoint Research, iPhone sales may sink to as low as 2 Million units in 2018 in India, down from 3 Million units in 2017. This will be the first decline for iPhone sales in 4 years, a sign of Apple losing its grip on the premium market segment in the country.
The primary competition to Apple in the premium segment in India comes from the likes of OnePlus and Samsung. As per data from Q2 2018, Apple had less than 15% market share in the premium segment in India (smartphones costing more than ₹30,000/~$415), while Samsung occupied 34% of the marketplace and OnePlus occupied 40%. This data was from before the launch of the OnePlus 6T, the Samsung Galaxy Note 9, and the new iPhone XS, iPhone XS Max, and iPhone XR, so there are likely to be even more changes in the above data – and not in Apple’s favor either.
Adding salt to Apple’s wounds is the increasing push from the Indian government to manufacture and assemble locally, which works out in the favor of OnePlus and Samsung and ends up raising the prices of already-expensive iPhones to even higher numbers. Due to the large price disparity caused by increased customs duties, the value on an iPhone purchase diminishes even further as against a Samsung or a OnePlus device. And factors like the law of diminishing returns coupled with the Indian purchasing mentality of value maximization means that even Apple loyalists will find it difficult to stick to their brand.
“10-15% of new customers in recent months have been defectors from Apple.”
Apple’s misery at the hands of OnePlus and Samsung also showcases why the Google Pixel 3 and the Google Pixel 3 XL are unlikely to fare any better than their predecessors in India, as the same factors that work against Apple in the Indian premium segment also work against the standard bearers of Android.
Here is a table encapsulating the launch prices of several devices in the Indian market:
|Phone||Launch Price in India||Converted Launch Price
(in USD, approx.)
|Launch Price in USA|
|iPhone XR (64GB)||₹76,900||$1,065||$749|
|iPhone XS (64GB)||₹99,900||$1,385||$999|
|iPhone XS Max (64GB)||₹109,900||$1,525||$1,099|
|Google Pixel 3 (64GB)||₹71,000||$985||$799|
|Google Pixel 3 XL (64GB)||₹83,000||$1,150||$899|
|Samsung Galaxy S9 (64GB)||₹57,900||$805||$720|
|Samsung Galaxy S9+ (64GB)||₹64,900||$900||$840|
|Samsung Galaxy Note 9 (128GB)||₹67,900||$940||$999|
|OnePlus 6 (64GB)||₹34,999||$485||$529|
|OnePlus 6T (128GB)||₹37,999||$530||$549|
Because devices like the iPhone are primarily imported into the country and not assembled or manufactured locally, they are unable to benefit from any of the incentives from the government under the Make in India programme. Instead, they have to pay ever-increasing import duties on their finished product. This creates a very wide disparity in the price of the product in the Indian market as compared to the US market, directly affecting the value-factor of the purchase decision. While premium segment phones are also purchased for their branding and exclusivity, they aren’t purchased only for such reason, and hence, leaking loyalists to other brands that have built up their reputation as well.
All is not completely positive for OnePlus and Samsung either. As they encroach upon Apple’s premium segment with better value products, the cost of these products has been increasing gradually. This pushes borderline entrants into the premium space back towards the mid-range offerings or more affordable flagships. This is clearly demonstrated by offerings like the Xiaomi Poco F1, which compete against the likes of the OnePlus 6 and fill in the void of “affordable flagships,” a segment that was pioneered by OnePlus themselves. So while you do gain some, you do end up losing some as well — just a matter of which part of the market you prefer.
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