While Apple only Holds 3% of the Indian Market, 15% of their Smartphone Upgraders are Considering an iPhone
In Q1 2017, smartphone penetration in India reached 48% a growth rate of 16% vs. the prior year. Rapidly expanding 4G infrastructure and low-cost 4G data services introduced by India telecom leader Reliance Jio have led to increased competition in India and stimulated higher demand for 4G-capable devices, reports Kantar.
Kantar Worldpanel reports today that "Chinese vendors have increased their smartphone sales share in India from 27% in Q1 2016 to 50% in Q1 2017. Xiaomi, Oppo, Vivo, and Lenovo have made significant investments in India in an effort to disrupt the local vendors, and out-maneuver South Korean giant Samsung, which continues to rank as the largest smartphone supplier in India with 27% of smartphone sales in Q1 2017.
Apple accounted for 3% of sales in the most recent period but has recently made several strategic moves in India, including teaming up with Reliance Jio to offer free 4G service for one year to purchasers of iPhone 7 and iPhone 7 Plus. Apple is also planning to manufacture iPhones in India in the near future to deflect some of the high import taxes that make iPhones inaccessible to many Indian buyers.
Over the next 12 months, 51% of current mobile phone owners in India say they intend to upgrade their devices. For current smartphone owners, that number is 52%. Samsung is the top brand preferred in India at 26%, followed by Apple at 15%. Between 7% and 8% of consumers intend to purchase Vivo or Oppo products.
All of this bodes well for Apple, especially if it can begin to manufacture iPhones in India in the coming months.
Purchases over $300 remain a small fraction of the market, but this is where Apple and Samsung dominate, as they do in more developed markets. For Apple and Samsung, growth opportunities in India may not be immediate, but over the next few years we believe that consumers will become more engaged in services, 4G infrastructure will be stronger, and by all predictions – people will want more premium phones."
Apple began their big push into India in 2016 with a major tour by Apple's CEO followed by a series of investments including a new Mac Lab, an App Accelerator facility, and an iPhone SE plant via Wistron. Apple's SVP of Worldwide Marketing Phil Schiller just finished a tour of India. Apple is also in constant contact with the India Government on trying to set up larger plants in India that would require more cooperation to encourage Apple's supply chain from China to open facilities in India.
During Tim Cook's opening statement with financial analyst for Q2 2017 on May 03, he stated the following: "We set a new March quarter record for India where revenue grew by strong double digits. We continue to strengthen our local presence across the entire ecosystem and we're very optimistic about our future in this remarkable country with its very large young and tech-savy population, fast growing econony and improving 4G infrastructure."
Without a doubt, growing their share in India is now a priority at Apple and we should hear more about their developments in that country over the next few years. It's still unclear if Apple's iPhone SE facility will be enough to gain license for a company owned Apple Store. Every time it looks like Apple's been given the green light, news from the government seems to dash that hope. There is strong opposition to giving Apple any consessions which leaves Apple's retail plans in limbo. The news of an Apple Store opening in India will be a positive development and hopefully we'll get to hear that news within the next year.
Kantar on iOS in China
In a secondary report, Kantar rehashes the news that while Apple's iPhone 7 was the best selling smartphone in China, it wasn't able to stop iOS from falling 8.6%, it's only weak market. Vendors like Oppo, Vivo, Xiaomi and others can't compete with Apple at the high-end of the smartphone market. Apple's iPhone is a status symbol, it's a smartphone with rich software and services. So the Chinese vendors shoot for the mid-market that sells in the $400 to $500 range with specifications that Apple's iPhone SE doesn't offer like a 5 to 5.5" display. Apple is likely to address this weakness later this year.
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