Google has launched its much talked about range of Pixel smartphones. Pixel smartphones will be available in two sizes – Pixel and Pixel XL. The phones are open for pre-order booking in US, UK, Germany, Canada and Australia. Other markets will follow. In India, Pixel will be available for pre-order on October 13.
Pixel is the first serious challenge for Apple from Google in the smartphone hardware, the segment that has made Apple the most valuable company globally. Two-third of Apple’s profit comes from iPhone. Pixel has been designed and produced by Google and Google is publicizing it with ‘Made By Google’ tag (there is a website as well - https://madeby.google.com/intl/en_in/phone/) while Google’s earlier trysts with smartphone hardware, i.e., Motorola’s acquisition and Nexus outsourcing, were basically experimental platforms to fine-tune its operating system Android, now the world’s most used OS. They were never in race with iPhone for any slot.
But now Google is going to repeat the same mistake which Apple has done.
iPhone is globally the most profitable phone brand and Apple is in Indian market for a long time now yet sale of Apple products including iPhone and Apple revenue in India is still 1% of its global performance.
The reason is its elitist (read absurd) pricing which is totally out of place in a price-sensitive market like India. The most premium and high-end smartphones in India are available in the range of Rs. 50,000-60,000 but if we see the overall picture, Rs. 10,000-30,000 is the most in-demand range for smartphones here whereas iPhone’s range for its latest offering (iPhone7) starts at Rs. 60,000 and goes upto Rs. 92,000.
This is in a country where the per capita income in 2015-16 was still Rs. 7774.
Now that Apple is seeing decline in iPhone sales in its growth driver China and stagnation in its other developed markets like US, UK or Europe, it needs a market like India, the world’s second biggest smartphone market. But Apple can never succeed in India at this price-range. Apple still wants to maintain iPhone’s ‘super-pricey’ tag in the Indian market. While that can sustain iPhone’s image of being a luxury brand, it will never allow Apple to become a big market player here.
And now Google is going to adopt the similar branding mantra.
Google Pixel starts at Rs. 57,000 in India and goes up to Rs. 76,000. We can only expect that Google Pixel will become another iPhone at this unjustifiably high price-range in India although cracking the Indian market is more imperative for Google than Apple.
Except India, Apple’s iPhone is the biggest brand in US, China and every other big market and earns maximum profit even if its market-share on unit shipments may not be the largest one in many markets. So, Apple commands a premium return. Now, Google will have to face Apple and other established brands including Samsung, the largest selling cellphone brand globally, in these markets. As Apple has a nearly non-existent presence in India, the country can be the big opportunity for Google to start on a solid base that it needs to take on Apple globally. And Google’s strong brand perception can come handy here.
Google is among the most valuable and strong brands. We can gauge its brand prowess by the fact that internet search has become synonymous with the term ‘google or googling’ and we should not be surprised if the term gets dictionary space in future. Its OS Android has 97% market-share in India – an absolute domination that tells us that almost every smartphone in India uses Android as its OS. So Google has already this software ecosystem advantage in the Indian market but given the price-range that it has chosen for its Pixel range of phones, it is never going to succeed on the hardware front. It is never going to get those volumes that any new business venture needs.
According to a report by Counterpoint Research, India has 220 million smartphone users and the Indian smartphone market has become the world’s second largest leaving behind the US market. But if we see the population penetration here, it is still at around 20% of the overall mobile subscription base in the country that is at 1.1 billion. From feature phones to smartphones – with a faster growth rate - that presents a huge opportunity.
Since India is the fastest growing smartphone market with 17% growth rate that is projected to increase further and its overall mobile subscription base is projected to reach at 1.4 billion by 2021 and as Indians are expected to buy around 150 million smartphones this year, Apple or Google or any other company can ignore the Indian market at its own peril. If Samsung and other companies have been able to crack the Indian market, it is because they have kept its price sensitivity on top of their marketing strategy – launching models and variants at every price point.