During an earnings call with analysts in May 2018, Apple Inc.’s CEO Tim Cook disclosed its record 2018 March quarter results. The company posted revenue of $61 billion, increased 16% on-year and net income of $13.8 billion, for the second quarter. Additionally, he announced to put high stakes on Indian markets, the world’s fastest growing Smartphone market.
Cook said, “India, we set a new first-half record. So we continue to put great energy there. Our objective over time is to go in there with all of our different initiatives from retail and everything else.”
In contrast, Apple has estimated less than one million iPhone sales in India during the first-half of this year, cites Bloomberg. Due to high tariffs ranging between 15-20 percent on the top of the premium cost of iPhone, Indian Smartphone buyers are inclined towards mid-range options offered by Samsung and Chinese phone makers – Xiaomi, Vivo, Oppo and Redmi among others.
Tumbling iPhone Sales Division in India
Looking at the comparatively low iPhone sales record in 2018 first-half, it seems that Cook has to devise a new iPhone sales strategy to entice budget-conscious Indian consumers.
Adding to the troubled situation, the iPhone maker lost three key executives from its Indian sales department in recent weeks, as reported by Bloomberg. The list includes Rahul Puri, National Sales, and Distribution Chief, Jayant Gupta, the Head of its Commercial Channels & Mid-market Business, and Manish Sharma, Head of Telecom Carrier Sales.
All the exits have come in the light of Apple’s move to restructure its Indian supply channels, a decision taken in this June, reports the Economic Times. The company has decided to squeeze its distribution system from five national distributors to two distributors namely, Ingram Micro and Redington. The other three channel partners – Brightstar, Rashi Peripherals and HCL Infosystems will get phased out by 2019 March.
And this is not the first time, Apple India operations have stumbled. Earlier in December 2017, Apple appointed Michel Coulomb as the head of sales for Indian operations, replacing Sanjay Kaul who stepped down from the position. However, 9to5Mac noted that even “Coulomb has been slow to cultivate business relationships and that the sales team has been left direction-less.”
Meanwhile, Apple’s market share is just 2 percent in India, the third largest market for Smartphone. It sold 3.2 million iPhone models in the nation in 2017 according to Counterpoint Research sales report.
Though the Cupertino giant has a tradition of achieving the set sales target by the second half of a year, it will be difficult for the company to even reach the previous year’s figure, predicts Neil Shah, a Research Director, Counterpoint Research.
High Hopes on Indian Market
The Apple CEO used phrases like “very bullish” and “very optimistic” to point out surging markets of Asia, during the media interaction in May 2018. In fact, he said the company has scheduled an aggressive marketing strategy for Indian Smartphone market.
For instance, the innovation giant is manufacturing iPhone 6S domestically so to avoid the import duty. Apple is also remarketing older models such as 6SE for $375 which is still quite an expensive phone for the Indian market.
Cook is eyeing India as it is strategically expanding its 4G infrastructure across the nation. Besides, it has a growing middle-income group, whom Apple calls its prospective customers.
According to the International Data Corporation’s (IDC) Quarterly Mobile Phone Tracker report released this May, India has maintained a healthy year-on-year growth rate of 11 percent during the first quarter of 2018. Xiaomi led the troupe with 30 percent market share based on unit sales of Smartphone, with closely followed by Samsung owning 25 percent.