While Apple is working on launch of its new iPhone 8, it has also been consistently aggressive on under-penetrated market and used mobiles market, which contributes major chunk in its revenue.
Apple in its latest strategy to win price conscious Indian market, is allowing online retailers such as Amazon and Flipkart to sale the retro model at concession rate. And this was witnessed during Amazon India this year grand sale (May 11-14), where iPhone 5S (which was introduced in 2012) was available at $300 (Rs 20,400). This is completely opposite to Apple’s high-end image, where similar model still cost $400 without taxes. iphone 6 was also listed during Amazon sale. The company has double down on retro model to suit Indian consumers.
In India, Apple is second to Samsung in used mobiles segment with 20% of share. In 2016, older phones accounted for almost 55 percent of the 2.6 million devices Apple shipped to India, said Counterpoint Research.
With sales down in the US and China, Apple is eyeing India and looking to set up a manufacturing unit to cut costs. The company said that the number of iPhones sold globally fell 1 per cent in the first calendar quarter, compared with the same period a year ago. It sold 50.76 million iPhones in its fiscal second quarter ended April 1, down from 51.19 million a year earlier.
Apple posted revenue of USD 52.9 billion for its fiscal second quarter ended April 1, 2017, up from USD 50.6 billion in the year-ago quarter. International sales accounted for 65 per cent of the quarter’s revenue. It reported net income of USD 11 billion for the second quarter as compared to USD 10 billion a year ago.
Apple uses an unique supply chain in countries it operates. The parts for the iPhone, iPad, iPod and Mac are manufactured, mostly by third parties, across 28 countries. Apple has close to 766 suppliers, of which 346 are based in China, 126 in Japan, and 69 in the US. It will begin full-scale production of Made in India iPhones coming out of a factory in Bengaluru later this year, as it awaits to seek more clarity on the goods and services tax (GST) rollout.
What India means for Apple
For global smartphone leader, the country of billion is an exciting growth opportunity with inceasing penetration and investment in 4G network. Recently, Relaince Jio data and call offerings gave the much needed momentum. Make in India programme led by India’s PM is also catching up with global manufacturing gaints.
Apple has been increasing its focus on India to claim a greater share of the vast smartphone market, which is dominanted by Sumsung. Apple reportedly holds only 2-3% currently. The company faces slowing iPhone demand in most of the regions, either because of competition, regulatory hurdles (as in the case of China) or market saturation (as in the U.S).
Indian market is highly cost sensitive, and this is where apple has find a way.
Earlier, Apple had expressed its desire to get concessions, including customs duty waiver on the import of components. The company had also made a detailed presentation on its road map for setting up a manufacturing unit to an inter-ministerial group headed by Ramesh Abhishek, secretary at the department of industrial policy and promotion.
Apple has sought modifications in the government’s phased manufacturing programme (PMP) as it plans to set up a manufacturing unit in the country.Under PMP, benefits are extended to parts and sub- parts as the manufacturing ecosystem evolves. It also aims to increase the domestic value addition for setting up a robust manufacturing ecosystem in India.