iPhone sales in June quarter dropped 35% even as smartphone market grew 19%
Sales of Apple’s iPhone in India fell by 35 per cent to 0.8 million units during the quarter that ended June 30, halving the company’s market share to 2 per cent from 4 per cent in the same period a year ago.
India’s smartphone market grew by 19 per cent in the June quarter to 30.7 million units from 25.8 million units in the same period last year. Smartphones running on Google’s Android OS now control about 97 per cent of the market, according to Boston-based research firm Strategy Analytics.
The slump in sales will make it tougher for Apple CEO Tim Cook, who has been looking for ways to expand in India as iPhones sales stagnate in the US and China.
Since last year, Cook has stepped up effort in India by overhauling the sales team, adding distributors, opening map development and App development centres and committing to open Apple stores. While India yielded to his plea that it cannot comply with 30 per cent local sourcing for setting up stores, Cook could not get concessions from Prime Minister Narendra Modi-led government to flood the country with cheap refurbished iPhones.
India, the world’s fastest growing smartphone market, is also a price sensitive one. Nine out of ten smartphones sold in India cost less than Rs 10,000.
The iPhone 5S, a three-year-old model, makes up nearly half of the company’s sales in India. While the device sells for between Rs 20,000 and Rs 30,000, competition from Chinese players such as Xiaomi and Lenovo has pushed down sales.
“Apple iOS will need to reduce iPhone pricing to cheaper levels, attract more operator subsidies and enlarge its retail presence through Apple stores or online channels if it wants to regrow significantly in the future,” said Woody Oh, director, Strategy Analytics, in a statement.
While sales of Apple’s iPhone in India dropped in the most recent quarter, the company in its recent investor call said that India was among its fastest growing markets. The company said in the nine months that ended June 30, iPhone sales in India grew by 51 per cent.
“India is now one of our fastest growing markets. In the first three quarters of this fiscal year, our iPhone sales in India were up 51 per cent year-on-year. We just announced a first of its kind design and development accelerator to support Indian developers creating innovative applications for iOS, and we opened a new office in Hyderabad to accelerate map development. We’re looking forward to opening retail stores in India down the road, and we see huge potential for that vibrant country,” said Cook last month after the quarterly results.
For Apple, India is the last large open market to capture. Sales of the iPhone have been falling globally due to saturation in markets such as the US and China. India, on the other hand, has become the fastest growing smartphone market in the world, with sales crossing the 100 million unit mark for the first time last year.
Majority of smartphones sold in India continue to be in the lower end. “The India market is not as mature as the China market just yet. It will take 3-4 years to have half a billion smartphone users and hopefully they will be mature enough to pick a flagship smartphone as their next smartphone. I think Apple is still waiting for that to happen,” said Neil Shah, partner, Counterpoint Research in an interview last month.