The second-largest country in the world by population has always been weak spot for Apple Inc. (NASDAQ:AAPL) and the iPhone. There are numerous reasons why the company faces competitive hurdles with Indian consumers.
Perhaps most important is that wireless carriers in the nation don’t subsidize smartphones, making rival devices much more affordable. On top of that, distribution is highly complex and Apple Inc. (NASDAQ:AAPL) is unable to open its own retail stores in India, which means it has far less control over the buying experience than it would like. Last summer, Tim Cook cited the “multilayer distribution” in India as a particular challenge, since that adds costs along the way.
However, Apple Inc. (NASDAQ:AAPL) has overhauled its Indian operations in recent months in order to grow its presence in the region — and those efforts are working.
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One of the more important aspects of Apple Inc. (NASDAQ:AAPL)’s changes has been to significantly broaden its distribution network. Many Indian consumers prefer to purchase mobile devices from smaller mom-and-pop shops as opposed to big branded retail stores. By strengthening its relationships with these local outlets, Apple Inc. (NASDAQ:AAPL) is starting to gain more ground, according to a recent CNN report.
IDC estimates that Apple Inc. (NASDAQ:AAPL) has quickly grown to grab the No. 2 spot in the Indian smartphone market by revenue. Like in other developing economies, Samsung is still top dog due to its willingness to target every conceivable price point. Since Apple Inc. (NASDAQ:AAPL) targets the high end of the market, it has a relatively lower unit share, even as its revenue share is on the rise.
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IDC research director Venu Reddy said that Apple Inc. (NASDAQ:AAPL) has made a major shift in its smartphone positioning within India.
Since Apple Inc. (NASDAQ:AAPL) has historically placed low priority on the Indian market due to these constraints, supply and availability have also suffered up until the recent changes. A month ago, IDC said iPhone shipments had soared by three to four times thanks to an expanded distribution deal with Redington, which is responsible for almost 70% of Apple’s Indian sales.
Other factors contributing to Apple Inc. (NASDAQ:AAPL)’s recent success is offering no-interest financing on iPhones and beefing up local marketing efforts.