New Delhi - As BlackBerry launches the first smartphone from
its make-or-break BB10 line in India, one of its most loyal markets, the
company faces new competition from a formidable rival that has long had a
minimal presence in the country.
More than four years after it started selling iPhones in
India, Apple is now aggressively pushing the iconic device through installment
payment plans that make it more affordable, a new distribution model and heavy
marketing blitz.
"Now your dream phone" at 5,056 rupees ($93), read
a recent full front-page ad for an iPhone 5 in the Times of India, referring to
the initial payment on a phone priced at $840, or almost two months' wages for
an entry-level software engineer.
The new-found interest in India suggests a subtle strategy
shift for Apple, which has moved tentatively in emerging markets and has
allowed rivals such as Samsung and BlackBerry to dominate with more affordable
smartphones. With the exception of China, all of its Apple stores are in
advanced economies.
Apple expanded its India sales effort in the latter half of
2012 by adding two distributors. Previously it sold iPhones only through a few
carriers and stores it calls premium resellers.
The result: iPhone shipments to India between October and
December nearly tripled to 250,000 units from 90,000 in the previous quarter,
according to an estimate by Jessica Kwee, a Singapore-based analyst at
consultancy Canalys.
At The MobileStore, an Indian chain owned by the Essar
conglomerate, which says it sells 15% of the iPhones in the country, iPhone
sales tripled between December and January, thanks to a monthly payment scheme
launched last month.
"Most people in India can't afford a dollar-priced
phone when the salaries in India are rupee salaries. But the desire is the
same," said Himanshu Chakrawarti, its chief executive.
Apple, the distributors, retailers and banks share the
advertising and interest cost of the marketing push, according to Chakrawarti.
Carriers like Bharti Airtel, which also sell the iPhone 5, run separate ads.
India smartphone market
Smartphone prices in India
India is the world's No. 2 cellphone market by users, but
most Indians cannot afford fancy handsets. Smartphones account for just a tenth
of total phone sales. In India, 95% of cellphone users have prepaid accounts
without a fixed contract. Unlike in the United States, carriers do not
subsidise handsets.
Within the smartphone segment, Apple's Indian market share
last quarter was just 5%, according to Canalys, meaning its overall penetration
is tiny.
Still, industry research firm IDC expects the Indian
smartphone market to grow more than five times from about 19 million units last
year to 108 million in 2016, which presents a big opportunity.
Samsung Electronics dominates Indian smartphone sales with a
40% share, thanks to its wide portfolio of Android devices priced as low
as $110. The market has also been flooded by cheaper Android phones from local
brands such as Micromax and Lava.
Most smartphones sold in India are much cheaper than the
iPhone, said Gartner analyst Anshul Gupta.
"Where the masses are - there, Apple still has a
gap."
'I love India,
but...'
Apple helped create the smartphone industry with the iPhone
in 2007. But last year Apple lost its lead globally to Samsung whose
smartphones, which run on Google's free Android software, are especially
attractive in Asia.
Many in Silicon Valley and Wall Street believe the surest
way to penetrate lower-income Asian markets would be with a cheaper iPhone, as
has been widely reported but never confirmed. The risk is that a cheap iPhone
would cannibalise demand for the premium version and eat into Apple's peerless
margins.
The new monthly payment plan in India goes a long way to
expanding the potential market, said Chakrawarti.
"The Apple campaign is not meant for really the regular
top-end customer, it is meant to upgrade the 10,000-12,000 handset guy to
45,000 rupees," he said.
Apple's main focus for expansion in Asia has been Greater
China, including Taiwan and Hong Kong, where revenue grew 60% last quarter to
$7.3bn.
Asked last year why Apple had not been as successful in
India, Chief Executive Tim Cook said its business in India was growing but the
group remained more focused on other markets.
"I love India, but I believe that Apple has some higher
potential in the intermediate term in some other countries," Cook said.
"The multi-layer distribution there really adds to the cost of getting
products to market," he said at the time.
Apple, which has partly addressed that by adding
distributors, did not respond to an email seeking comment.
Ingram Micro, one of its new distributors, also declined
comment. Executives at Redington (India) Ltd, the other distributor, could not
immediately be reached.
BlackBerry, which has seen its global market share shrivel
to 3.4% from 20% over the past three years, is making what is seen as a
last-ditch effort to save itself with the BB10 series.
The high-end BlackBerry Z10 was launched in India on Monday
at 43,490 rupees ($800), close to the 45,500 rupees price tag for an iPhone 5
with 16 gigabytes of memory. Samsung's Galaxy S3 and Galaxy Note 2, Nokia's
Lumia 920 and two HTC Corp models are the main iPhone rivals.
BlackBerry will target corporate users and consumers in
India for the Z10, said Sunil Dutt, India managing director, adding that it
will tie-up with banks for installment plans.
Until last year, BlackBerry was the No. 3 smartphone brand
in India with market share of more than 10%, thanks to a push into the consumer
segment with lower-priced phones. Last quarter its share fell to about 5%,
putting it in fifth place, according to Canalys. Apple was sixth.
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