Smartphone maker Apple has
seen a sharp fall in its India sales during the first three months of 2013, a
trend that analysts say might persist as the California-based company looks to
make deeper inroads into world's third-largest smartphone market.
Sales in India had soared soon after the November launch of iPhone 5, the latest iteration of Apple's smartphone. In an
uncharacteristic move, Apple followed up with a sustained marketing campaign,
advertising discounts schemes and monthly instalment options for customers in
India, where its phones are seen as too expensive.
"The October-December quarter was an exceptional one for iPhone, but that hasn't been the case since
then," said Manasi Yadav, who tracks India's smartphone market for
researcher IDC. According toIDC data,
iPhone sales have been on a downward trend after the robust sales in response
to the marketing campaign and financing schemes.
Between January and March, Apple sold some 120,000 iPhones in India, down from
the 230,000 in the October-December quarter of last year, according to IDC.
That translated into its share falling from 4.7% to 2.1%. In India, Apple faces
competition from South Korean rival Samsung as
well as local brands such as Micromax and Karbonn, all of which are among the
top three in terms of market share.
Apple did not reply to emailed queries seeking its views. Marketing blitz,
discounts fail to sustainApple iPhone sales
in India "The initial buzz around Apple is over," said Faisal
Kawoosa, analyst at market researcher CyberMedia Research, who remarked that
iPhone sales have been falling in the past two-three months as well.
Samsung, which has a 40% share of the smartphone market in India, had responded
to Apple's marketing and sales moves with its own offers of discounts and
financing schemes. Even globally, Apple has been facing increasing
criticism about the absence of new device launches that could help the company
continue its popularity among users.
Since the launch of iPhone 5, the company's stock has fallen nearly 40%.
Analysts have also been awaiting clarity from Apple's management about its
strategy to gain in emerging markets such as China and India.
Research firm Strategy Analytics estimates that nearly 10 million smartphones
were sold in India during the first three months of 2013, making it
third-largest market after the US and China.
Apple's slowdown is also impacting its large national distributors such as
Redington, which sold some Rs 1,100 crore worth of iPhone in the last five
months of 2012. An analyst with a foreign brokerage that tracks the
Chennai-headquartered distributor said that he estimates this to fall to as low
as Rs 800 crore in 2013 on account of waning demand for the device. Sales of
iPhones make up some 7% of Redington's revenue.
According to Kawoosa, the discounts and EMI schemes
may have affected Apple's brand image among high-end smartphone users.
"Apple has a certain image and it is not the sort of brand that gives you
huge discounts. I think they went after market share at cost of diluting brand
value and this was clearly a short-sighted strategy." The
company has recently begun a retail initiative in hopes of boosting sales of
the iPhone at Apple Stores, rather than having customers obtain their handset
through carrier partners or smartphone resellers. One
approach being attempted by the company has its retail employees talking to
customers about upgrade opportunities if they bring in their iPhone to a Genius
Bar for repairs. Currently, about half of all iPhones that need repair are
serviced at a Genius Bar, and Cook would like to see sales figures match that
share for Apple retail. But Cook's goals
may not be realistic, according to new data from Consumer Intelligence Research Partners,
detailed on Wednesday by AllThingsD.
That's because Apple's retail locations are already well-trafficked, and an
influx of new sales may not be possible without a major increase in locations
and employees. "We don't see how their mostly
jammed stores can handle more customers, sales associates and inventory,"
CIRP co-founder Michael Levin said to reporter John Paczkowski. CIRP's latest data shows that the share of iPhones
sold through Apple retail stores in the U.S. is currently less than 15 percent,
having steadily declined from 20 percent since the launch of the iPhone 5 last
September. About 30 percent of U.S. iPhones are sold through Apple's largest
carrier partner, AT&T, while Verizon's share is just north of 20 percent as
of June 30. Apple's sub-15-percent share
comes in third, while carriers T-Mobile and Sprint are clustered with retailer
Best Buy at around 10 percent of iPhone sales. CIRP also revealed that 90 percent of first-time iPhone buyers purchase
Apple's smartphone at a carrier store or reseller — not an Apple Store. Apple's hope is that driving iPhone sales through its
own stores will increase the handset's "halo" effect, which drives
customers to buy other products from the company. For example, CIRP's data
shows that 52 percent of iPhone buyers at an Apple Store own an iPad, and 30
percent own a Mac laptop. In contrast, just 37 percent of iPhone buyers at a
carrier own an iPad, and 20 percent have a Mac laptop. To further its efforts to bring in more iPhone
customers and sell them upgrades, Apple also plans to begin taking iPhone trade-ins at its retail stores. But Levin and CIRP aren't
convinced that will work. "We don't know, exactly, how Apple
can realistically meet Cook's goals," he said.
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