Apple CEO Tim Cook, while presenting the figures, reiterated his concerns about saturation in the smartphone market.
And indeed it is happening. The latest report by the market research firm IDC, on April 27, a day after Apple came out with its earnings, shows that the global smartphone market remained almost flat with just 0.2% growth in shipments in the last quarter.
While it concerns every smartphone maker, it should be more worrying for Apple.
Its main market, the US, is near saturation. It growth driver, the China region, saw a whopping 26% decline. And Apple is not even 2% of the market size in the world’s third largest smartphone market, India, despite being in the country for years. Apple has ignored India in a questionable pursuit to establish itself as a premium, upmarket brand, thus missing out on the opportunity to create a solid base in the country.
India is projected to overtake the US next year to become the second largest smartphone market as Morgan Stanley concludes. And the distinction the Indian market has now is while China’s economy is slowing down, India is now the world’s fastest growing market.
Add to it the demographic dividend - according to the Morgan Stanley report, smartphone market in India is still just 18% of its population with 225 million subscribers.
So, there is a huge potential to tap – with the right kind of mix – like an ever increasing base of Middle Class, a fastest growing economy with over 80% tele-density and a young population base. India has already the world’s largest youth population of some 360 million people in 10-24 age-group and the country will be the youngest nation demographically by 2020.
So, all you have to do is to remain there, as a sincere, responsive brand when the growth takes off. And it is happening in the Indian smartphone market now.
Apple is now pushing for its presence in volume segments in India with the recent launch of iPhone SE but it is too little too late, and again, is coupled with a poor insight. In a price conscious market like India, that is projected to be the world’s largest middle class by 2030, no one would go for obsolete versions of iPhones or an exorbitantly priced substandard product, iPhone SE at over $500, when other vendors including Samsung and Chinese entrants are offering world class products at much cheaper price points.
Samsung is present with a flagship product in every pricing segment in the Indian smartphone market while the top-end models of Xiaomi, Gionee, Lenovo, Oppo, Vivo and Micromax, all are priced at around $400.
Apple needs to follow the basics of branding here. Apple needs to earn people’s respect in India. The astronomically priced iPhone is certainly not an exciting prospect for an Indian smartphone user, especially when those with access to the US and other markets can have the gadget for a much lower price.
Samsung, the South Korean behemoth, sits here at the top, with a comfortable margin from its nearest rival, a home grown Indian company, Micromax.
While Apple has failed with its strategy in the Indian market, Samsung has adeptly captured it.
And the fact that Samsung’s top-end smartphones are priced at around $800, near iPnone’s around $900-1000 tag, and that in spite of that they sell well, makes Apple’s marketing strategy in India even more a pathetic case study. Samsung has 24% market share in the smartphone segment in India while Apple is not even 2% and it tells a lot.
India is the market now the world is looking at, for smartphone, or for every other segment the market consumes. Analysts say the Indian smartphone market today is what China was five years ago – with immense potential of growth.
Apple seems to have missed this growth story. And its current marketing strategy in India says the company have learnt nothing from that.