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Apple 'Make in India' to Target Indian Youth For Expanding User Base

Apple iPhone prices will see a drop in India with Apple's 'Make in India' plans. For now, Apple iPhone SE production facility in Bengaluru will aim to cater to the mid-range smartphone category and on further expansion of its manufacturing units, Apple will be able to cut down on the production cost for all the iPhone models. These savings can then be used for lowering the prices of the iPhones as well as for expanding Apple's reach in the country.

IANS

Updated:July 5, 2017, 3:03 PM IST
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Apple 'Make in India' to Target Indian Youth For Expanding User Base
Apple iPhone SE - Made in India. Representative Image. (Image: news18.com)
Primarily a premium segment player, Apple is slowly opening up new avenues to expand its presence in India -- a price-sensitive market with a gigantic user base scouting for devices in the Rs 15,000-Rs 30,000 range. The number of smartphone users in India is expected to reach 340 million by the end of this year and, currently, Apple has three percent market share by volume and 11 percent share by value in the country. This is poised to change as the Cupertino-based giant has set its eyes firmly on aspirational youth in order to create a new iOS user base in the mid-segment that will eventually shift to its premium models.

Apple CEO Tim Cook recently told Prime Minister Narendra Modi, who was in the US on an official visit, that his company is positive about the production of iPhone SE model in Bengaluru. iPhone SE is targeted in a price range where flagships from the Chinese manufacturers are ruling the roost. But once Apple goes full-throttle with iPhone production in the country, the scenario could be completely different. Given the fact that the China market is not expected to grow as rapidly as India in the next few years, industry experts feel that the country presents itself as the next big market with a huge number of smartphone replacement users, along with feature phones to smartphone migrants.

"Assembling in India becomes critical since this will give savings to Apple which can partly be used to bring down prices and part of it can be used for expanding distribution, channel margins, retail marketing spends and ensure placement in smaller towns and cities where the consumer is highly aspirational and strives for a premium brand like Apple," Navkendar Singh, Senior Research Manager at IDC India, told IANS. However, to grow volumes in India, Apple needs a long-term focus as the urban middle class and per capita income go north.

"Since Apple enjoys a huge aspirational appeal in India, the relatively higher price points of iPhones put those out of reach of a large addressable base. To this effect, easier payment plans for potential consumers over and above the credit card holders in India and bundling offers should help in reaching out to this large base," Singh suggested. Apple's partner Wistron Corporation is manufacturing iPhone SE in Bengaluru. "Although iPhone SE is a mid-tier focused device, it is certainly a different device compared to other older generation iPhones in the sense that it has the latest OS and features you would normally get in flagship models. From this perspective, this is an updated device," Anshul Gupta, Research Director at Gartner, told IANS.

If you look at the US or China, people have already moved on to their fourth or fifth smartphones. "The Indian market is now maturing in the sense that the user base which is buying their second or third smartphones is growing and that is the important user base for Apple," Gupta added. Post-GST roll out, Apple has also reduced prices across its product range in India. The mix of iPhone sales in the Apple portfolio has always been in favour of older models. Even during the first quarter this year, more than half of the iPhone sales came from older models.

In the first quarter of 2017, the premium segment (over Rs 30,000) grew by 35 percent (year-on-year) with Samsung accounting for 48 percent market share, followed closely by Apple at 43 percent. But Apple looks set to shift the game to the mid-end segment. "With mid-end segment growing and users upgrading fast in that segment, Apple's strong presence in sub $400 segment will help it grow its market share and ultimately lock in more users in its ecosystem which are likely to upgrade to newer iPhones in future," said Tarun Pathak, Senior Analyst, Mobile Devices and Ecosystems at Counterpoint Research. In India, there are several buyers in the sub-$300 category, contributing nearly 70 percent of the overall sales. "But if you look at smartphones costing $600-$700, those are also growing equally as the base at the bottom. There is a growth all over and as far as Apple is concerned, if it can grab Android users early and get them buy an iOS device, it can realise future growth faster," Gupta emphasised.

"Apple should make efforts in investing in the offline channel. The retail level activation and channel engagement initiatives will be very crucial for this," Navkendar noted.

For Narinder Kumar, an analyst at Cybermedia Research, Apple should target youth and professionals in tier 1 and 2 cities to propel demand. "For that, the company should strengthen its channel network and increase the number of service centres. It should go for exclusive financial tie-ups, buybacks/exchange and extended guarantee offers," Kumar added.

Apple is surely already looking into this. Wait for a new Apple India story to unfold soon.

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