Why Apple Needs to Fast Track an iPhone Launch in India

A few weeks back, Apple posted its first-ever year-over-year decline in iPhone sales, and first revenue drop in 13 years. The company also predicts iPhone sales for this quarter will be down over the same quarter last year. Though most financial analysts saw these numbers as the new normal and put out a buy recommendation, Cupertino's stock took a significant hit.

The one bright spot was the news that Apple's services business is now bringing in more revenue than its Mac business. Financial analysts finally see that services are big deal and are factoring that into Apple's long-term growth.

However, the big question seems to be whether Apple can really grow the iPhone market again. It is clear now that the introduction of the iPhone 6 was sort of an anomaly, as there was pent-up demand for a large-screen iPhone. In that sense, the giant bump in sales was a one-off event that is almost impossible for Apple to replicate. The 4-inch iPhone SE ( at Amazon)  will meet the needs of buyers who think the 5- and 5.5-inch screens of the iPhone 6 series are just too big. But even this demand is not enough to get Apple back to the huge growth numbers of the past.

In the short-term, Apple should set its sights on India, where Apple currently has about 1 percent of the market. At the same time, only about 25 percent of the Indian population has smartphones today. That is 25 percent of 1.252 billion people, which leaves a market of just under 1 billion people who over time could buy a smartphone.

We have been doing a lot of research in India these days, and see that while Apple is a known brand there, interest and demand is relegated to an upper-crust audience. This is in huge contrast with China, where Apple is considered a luxury brand and even those in the middle class lust after an iPhone. In fact, owning one changes a person's status within their peer group.

But in India, it is price that matters. Indians are much less focused on status and brands as much as they are on getting the most bang for the buck. During a recent earnings call, Tim Cook said Apple has its eyes on India and that "India is today what China was 10 years ago."

Economists who follow India suggest that a rising middle class could be huge for its people and its economy. Much of that, however, is tied to Internet access, which helps people get better jobs, education, and wages.

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Although Apple could wait another four or five years to enter India, when more people can afford its phones, I would think that it would want to help this market grow. But to do so any time time soon, Apple will have to create an iPhone just for the Indian market at a price that would be acceptable to this very cost-conscience audience. From our research, that pricing needs to be in the $239-$279 USD range, but it will still go up against some very full-featured devices that cost $149-$229.

Apple could also start a major branding campaign in India to make this market more receptive to an iPhone within a year or two. It seems that getting a bigger start now would really help it gain momentum.