Apple Inc. (AAPL): India Struggles are Distribution, Not Price

Apple Inc. (AAPL)Apple Inc. (NASDAQ:AAPL) has been a market leader in smartphones in virtually every existing market in the world, developing a brand that transcends cultures. However, the company has had a difficult time getting a foothold in emerging, very large markets like India and its 1 billion people. Apple Inc. (NASDAQ:AAPL) is struggling with just a little more than 1 percent of the phone market in that country, and sales are expected to double in 2012 from their 2011 levels. With many of the phones in India purchased being entry-level phones (rather than smartphones), Apple Inc. (AAPL) is looking to take on a new stratgey to grab a larger share of the expanding marketplace.

It’s about distribution, not about price. Rather than lower prices or develop an entry-level iPhone – the new iPhone 5 is expected to retail for more than $800 when it hits shelves in India this month, while nearly 7 in 10 handsets sold in India last year cost less than $100 – Apple Inc. (NASDAQ:AAPL)  instead reported that it was going to change its distribution channels to reach more potential users. The previous take was to work solely through the carriers, but now the company said it was going to expand its supplies to other sales partners like retail stores that are not affiliated with wireless carriers.

Apple Inc. (NASDAQ:AAPL) CEO Tim Cook addressed the India sales challenge in an earnings conference call recently, saying that due to complex distribution avenues in the country, that has driven up costs for the phone.

But the market, while large, is still very much emerging. The country saw 11 million handset sales in 2011, and is expected to increase to 20 million this year. Overall, the market has 220 million handsets, but 70 percent of them are phones that cost in the double-figures, rather than the higher-end smartphones. Will this strategy work and help Apple Inc. (NASDAQ:AAPL) gain more share? What should investors like billionaire fund manager David Tepper of Appaloosa Management LP expect from this strategy? What would you do if you were in Apple headquarters to address the India challenge?

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 9 Most Dangerous Countries for Tourists to Visit

Reign of Terror: The 10 Most Ruthless Politicians in History

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!