Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

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?

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.