India: Apple’s next big market?

Apple is trying to crack the Indian market for the iPhone in a bid to challenge Samsung’s dominance in the emerging market giant.

It won’t be easy though. According to the Wall Street Journal the Cupertino-based giant will completely overhaul its operations in the country to better adjust to its convoluted distribution process.

There’s good reason for Apple’s desire to get a foothold in the country. Smartphone growth in more developed markets is stagnating and, according to Strategy Analytics, India is poised to become the world’s third-largest smartphone market this year After the US and China.

One strategy Apple is employing to get people in the country interested in buying the iPhone is side-stepping the mobile operators and handing out loans to low-income consumers.

It’s also increased its staffing presence in the country by 30% to 170 employees and is set to introduce a greater range of products in the country says the Journal.

The strategy appears to be paying dividends too. In the last quarter, Apple shipped 252 000 to India. That’s more than triple the number it shipped in the quarter before that. The 460 000 units it shipped in the whole year however are just a fraction of the 19.6-million iPhone shipments it made to China and the 1.4-million to Brazil in the same period.

The Cupertino-based giant still has a long way to go before it comes anywhere near catching up to Samsung though. The Korean giant owns 40% of the market, largely thanks to its decision to make India a focus and offer a range of phones at competitive prices, while Apple can lay claim to just five percent of smartphones sold in the country.

Even with an increased presence and loans however, Apple will battle to get a solid presence in the country. Most Indians still own feature phones, and those entering the smartphone market for the first time are more likely to buy cheap Android devices than anything Apple has to offer.

“Apple is still very much at the premium end and out of reach of average consumers,” says Neil Shah, a senior analyst with US based Strategy Analytics.

It’s also hampered by the fact that Indian regulations mean it can’t open its signature retail stores or sell iPhones directly on the web. In fact, the mobile operators don’t even have their own stores, with phones going through them, national and local distributors and mom-and-pop retail shops before eventually landing up in the hands of everyday people.

“The multilayer distribution there really adds to the cost of getting products to market,” Apple CEO Tim Cook told analysts last year.