The year 2016 started off on a promising note for Apple in India.
In May, CEO Tim Cook paid his maiden visit to the country. Not only did he meet with prime minister Narendra Modi but Cook also wooed the public by visiting temples, attending Bollywood parties, and watching cricket matches.
The company also struck a deal in October with Reliance Jio, an LTE mobile operator in India, which plans to roll out 4G coverage in 18,000 cities and 200,000 villages across the country in October. Apple is also setting up a distribution center on the outskirts of India’s commercial capital, Mumbai, so its products are “rarely sold out at the retail level” and they can achieve “common pricing for offline and online sales.”
But the technology giant’s efforts in India have been inconsistent.
After finally getting the much-awaited permissions to set up shop in the country, the Cupertino-based company is being elusive about when its first retail store in India will open its doors. Although iPhone sales climbed up 50% in India from the year prior, the share of iOS devices was sliced almost in half in the second quarter, down to 2.4% from an already small 4.5% a year earlier. Competition from low-cost Android alternatives is pushing the iPhone maker out of the running.
In 2017, Apple first needs to recognize the myriad India-specific challenges holding it back, and then it needs to make a more deliberate play to fix them.
Cost and competition
Despite its desirability, Apple’s unaffordable price tags remain a huge deterrent for India’s price-sensitive consumers. The iPhone’s latest model retails at around $1,000, much more than other high-end brands. The average smartphone in the country costs only $158, according to Mary Meeker’s 2016 Internet Trends report.
To make matters worse, Indians pay more than the rest of Asia for Apple’s products—the iPhone 7 costs nearly $200 more in India, compared to Japan.
Apple considers India its next frontier for growth after China but India is a tougher market to crack. The South Asian country has a much lower per capita income of $1,598 compared to China’s $8,028.
“In China, [Apple was] in the right place at the right time,” Anindya Ghose, director of New York University’s Center for Business Analytics, told Quartz. “They didn’t have any major competition from the likes of Huawei or Xiaomi.”
But in India, these two brands, as well as other China-made phones—Oppo, Vivo, Gionee—have launched a slew of low and middle-priced options. Local players, such as Micromax and Lava, and South Korean giant Samsung also pose a threat to Apple’s business.
When the brand tried to combat high prices by selling cheaper, refurbished iPhones in Asia’s third-largest economy, the government shelved those efforts. India is concerned that Apple’s devices will add to the country’s abundant e-waste problems. In 2015, a proposal to import used iPhones and iPads was denied by the environment ministry’s technical review committee for the same reason.
And cheaper phones are only a partial solution. Apple needs to differentiate its product from other low-priced models consumers already have access too. The product will only have value if it is “Indianised,” said Vivek Wadhwa, a fellow at Carnegie Mellon University. He suggests making local language keyboards a standard feature on a stripped-down version of the current iPhones, as well as adding localised apps and services. “You still have the Apple logo and the elegance of the Apple [device] but at much lower price points.”
The language barrier
Indeed, if Apple wants to grow its user base beyond the upper echelons of Indian society, who are well-versed in English and aware of American brands, it needs a plan to knock down language barriers.
Siri speaks Mandarin, French, Arabic, and more but she can’t converse in Hindi—an option Google Assistant offers. “[Adding language support] would be a challenge, too, considering the diversity,” International Data Corporation research manager Kiranjeet Kaur said, referring to the fact that less than 40% of Indians speak Hindi. The solution? The company would have to focus efforts on over 20 spoken languages in the 1.3 billion strong country—like Google and Facebook are doing—especially if it wants to capture an audience beyond the country’s 125 million English speakers.
The largest domestic smartphone manufacturer, Micromax, sells regional-language-enabled devices to tap into rural India, which comprises 70% of the population. Apple, meanwhile, doesn’t even feature in the top five smartphone vendors in the country.
Misplaced efforts
Globally, services such as iTunes, Apple Music, the App Store, iCloud, and Apple Pay offer the promise of growth. In the fourth quarter of 2016, Apple’s revenue from services climbed up 24% from the year prior, raking in $6.3 billion. But in India, there has been no aggressive push for services.
“The onus falls on Apple to build a local ecosystem to cater to Indians and it doesn’t look like Apple is moving in that direction,” Kaur points out.
Apple Maps’ launch in 2012 was a botched job due to a lack of testing and erroneous data. The company set up a new office in Hyderabad this May to focus on Maps development. In mid-December, the citizens of India finally got access to live traffic data, which was already available in several markets for years.
When the company launched Apple Music in India in July 2015, it appeared serious about courting the market. What typically costs $10 per month for individual accounts—and $15 for a “family” of up to six people to share in the US—was retailing at Rs120 ($2) and Rs190 ($3) respectively. Still, local alternatives had Apple beat in India—music streaming apps like Saavn, Gaana, and Hungaama are all cheaper and they got a headstart in the Indian market before Apple’s 2015 launch.
Ghose recommends that Apple should “partner with some of the local app developers so that the content and features are customized to the Indian market” and take a page out of Amazon’s playbook to license deals with major movie and music studios for digital content.
In a year where Apple lost its grip on China, India’s open market could offer Apple new hope—if it just learns to compete fiercely.