Apple Continues to Struggle in India as iPhone Sales Drop 35 Percent in 2016

Despite India's overall healthy growth in the smartphone market -- currently sitting as the third largest behind China and the United States -- Apple is having a tough time gaining ground in the country. According to a new report from Strategy Analytics, Apple saw a drastic percentage dip in iPhone users from 2015 to 2016, with 35 percent fewer iPhone devices sold this year. Earlier in May, Apple CEO Tim Cook admitted iPhones are too expensive in India, potentially harming the company's sales figures as it tries to grow.

In its new report, the market research firm said that Apple sold just 800,000 handsets in Q2 2016, while in the same year-ago quarter the company sold 1.2 million units. These deflating sales numbers rippled into Apple's operating system marketshare in India, essentially getting halved down from 4.5 percent in Q2 2015 to 2.4 percent in Q2 2016. Director of Strategy Analytics, Woody Oh, pointed out a few ways Apple might go about course correcting its current struggles in the country, including the ongoing saga of boosting its retail presence in India.

“Apple iOS fell 35 percent annually and shipped 0.8 million smartphones in India in Q2 2016. Apple’s smartphone marketshare has halved from 4 percent to just 2 percent in India during the past year. Apple iOS will need to reduce iPhone pricing to cheaper levels, attract more operator subsidies and enlarge its retail presence through Apple stores or online channels if it wants to regrow significantly in the future.”
Apple Stores aren't as ubiquitous in India as they are in other parts of the world thanks to the country's rules on foreign direct investments, which required 30 percent of goods sold by a foreign company to be manufactured or produced within India. Thankfully, after a ruling in June cleared the way for companies to circumvent that law, Indian Prime Minister Narendra Modi set a precedent by granting Apple a three-year extension on the strict local-sourcing rule, due to its single-brand retail company status selling "cutting-edge technology." Companies similar to Apple are expected to get similar treatment.

While the relaxation of these rules should help Apple moving forward, it doesn't change the fact that Android remained the dominant force in India this year. In total, 29.8 million Android smartphones shipped within the country in Q2 2016, growing from 23.2 million in the same quarter last year. Similarly, Google's Android operating system remained the dominant force in the Indian mobile market with a record 97 percent hold for the quarter, increasing from 90 percent a year ago.

Apple's retail future in the country might be turning around, but the company is still hitting smaller roadblocks on its route to increasing sales figures in India. In May, Commerce and Industry Minister Nirmala Sitharaman ruled "not in favor" of a proposal laid out by Apple to sell used iPhones in the country. Thanks to Apple's repeated growth frustrations, Strategy Analytics said that Android's domination of the Indian smartphone market "looks unbeatable right now, due to its deep portfolio of hardware partners, extensive distribution channels, and a wide range of low-cost apps like Gmail."

Tag: India

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45 months ago
That's the problem when selling a thousand dollar phone in a country where most people struggle to eat everyday.
Rating: 29 Votes
45 months ago
"Earlier in May, Apple CEO Tim Cook ('') admitted iPhones are too expensive in India (''), potentially harming the company's sales figures as it tries to grow."

Does this mean they're a bargain in the rest of the world? I think not. Just wait till they add the "Pro" name and make them even more expensive. ;)
Rating: 27 Votes
45 months ago
don't know about india, but apple obviously can't give us something new. I just can't wait to skip iPhone 7...
Rating: 19 Votes
45 months ago
That's what usually happens when you get lazy!
Rating: 17 Votes
45 months ago

Apple needs to be knocked down a peg or two. Resting on their laurels a little too much, if you ask me (and even if you don't).
Rating: 17 Votes
45 months ago

That's what usually happens when you get lazy!

India is incredibly price conscious; Apple doesn't sell cheap phones. No surprise here.
Rating: 15 Votes
45 months ago
Not Surprised. Apple no longer innovates... i'm a long time apple user but damn...of late Apple is really just so disappointing with their products and practices
Rating: 15 Votes
45 months ago
All these comments about people not having money to eat, so can't buy iPhone is bull..... Whats your market guys? I would estimate Apple's market to be around 60M in India amongst a population of 500-650M mobile phone users. You just don't know how people are ready to spend. Spending power for the age group between 22-40 is super high at the moment. These 60-80M have deep pockets to give the INR 65,000- INR 80,000. (I can buy a good motorcycle for that price). So, that is the market. The rest is the decently priced and lower priced market. So selling only a few million iPhones is because of other reasons.

Talking about phones:

1. Great variety of handsets/phones available. (Range - INR 15,000 to 35,0000) - which can do what an iphone does (build quality, features etc.)
2. Too many players - excellent competition, network to get phones. Starting from local stores to online sales.
3. Most apple apps DONT work in India.
4. Apart from the "oooh - apple", common man doesn't care. He wants functionality, value for money.
5. Android apps are far more flexible, more customizable and can just do a lot of nerdy things. College kids, youngsters - the new gen who earn more and are ready to live on credit! - the previous generation thought different, save first, rest use for spending.
6. Android apps - more options I would say.
7. As for Quality, I have never bought a product which didn't work. And if it didn't after a few years, there are enough places to get it repaired or it not that expensive to buy a new one.
8. iPhone customer service in India is not like how it is here in the US... its convoluted. A non-iPhone user probably has better ways to get his phone fixed if it doesn't work than a guy who spent INR 70K.

Tim is targeting some of these by opning up a developer center, retail stores etc. You can't boss around, you got to play by the rules of the land. Do what you need to, and then enter the market. An Indian buyer always loves aggressively priced products. Its not being cheap, its looking for value.

All other reasons stating economic conditions is just nonsense - that is not your market.
Rating: 10 Votes
45 months ago

every time i see this news the only thing that comes to my head is that Nadella is from india. and is like the indian people don't support apple because they are with Microsoft because Microsoft CEO is from india. that's why they don't support apple because they are supporting Nadella. because they don't want to betray their brother, another reason might be that Microsoft is cheaper.

You're kidding, right? Microsoft phones have almost been demolished in India, just has it has been worldwide. Indians are flocking to Android for a lot of reasons:
1. Google apps ACTUALLY work - Maps, Google Drive/Photos, Gmail etc and most of these are free. Many of Apple's core apps don't work at all - Maps is pathetic, iCloud 5GB is horrible (especially when you're getting somewhat 'unlimited' with Google's offering), Apple TV apps don't work etc.

2. Android devices like the ZTE Axon7, OnePlus 3, Xiaomi Mi5 etc are competitive enough with Apple's offerings (some even arguably better with the tech specs) and Samsung's advertising power is a demon in India.

3. Apple's phones are way more expensive than it should be. Blame it on the ridiculous tax system or Apple's banality to earn more profits by pricing the same product 300 USD more than in the US, which sane person would actually buy it when one can buy the Galaxy S7/Edge (with the latest specs and more options like SD card slot, waterproofing etc) for less money than the 6S.

4. Apple's customer service is terrible in India. Believe you me when I tried to fix the FaceTime camera on my rMBP that I bought in India and it was a nightmare. My bf got frustrated with his iPad unusually heating up and freezing and rebooting constantly and when we took it to the Authorised Service Centre in New Delhi, the blokes there said that a fresh software reinstall will fix it. As if we hadn't tried that before, we let that guy do it and less than 30 mins of the reinstall, it started acting up again. He then clearly said that Apple will fix it with he next update. WTF! My iPhone 5 had battery issues and I had to get it fixed but that bloke again said a reinstall is needed. I gave up and just held onto them until I came back to Germany (where I'm studying) to fix them. I took it to the Apple Store in Frankfurt and my iPhone 5 was replaced on the spot, the rMBP's camera was fixed as there was some loose cabling in the logic board and the iPad was replaced as it had a bloated battery.
Unless Apple fixes their services there, why would anyone want to deal with all the hassles even after paying for a premium device?

5. And for the 'oh-so-rich' commenters talking about India's poverty, yes, you are correct to a certain extent. More than 45% of the population are so darn poor that even sub-Saharan Africa could be considered posh. About 30-40% middle class are averagely rich (who own lands, farmlands, houses/flat in metropolitan cities etc) and the 10% are just mind-blowingly affluent that it would even shame the people who are commenting about the poverty in India. Apple is targeting those 10% and probably about half of the middle class. In sheer numbers, that would equate to about 120 million (super rich) and 480 million (middle class) and in no way are those minuscule. So yes, there is a HUGE market potential in India and Apple knows that.
Rating: 8 Votes
45 months ago
If iPhone are too expensive in India - why push them there?
Rating: 8 Votes

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