Apple Opens Indian Retail Shops for iPhone 4 and Other Old Products

iPhone 4S 2011

Apple (NASDAQ:AAPL) is reportedly planning to open some smaller, iOS-centric retail stores in India that will focus on getting the company’s older, less expensive products into the hands of consumers in the country, according to Indian paper The Economic Times.

The stores aren’t exactly separate Apple Stores but are located within Apple’s local distribution partners. The Economic Times said that Apple distributors Redington and Ingram Micro will set up the shops, and Apple is still in talks with other trade partners and retailers about setting up the stores around the country. The publication also said the stores will be small, between 400 and 600 square feet, and located in many neighborhoods and high-traffic areas.

Apple is also reintroducing the 8GB iPhone 4 in India, as the company has continued to lose ground in that market to rival Samsung Electronics (SSNLF.PK) despite the introduction of the iPhone 5C. The 5C was thought to be Apple’s attempt to make a lower-end model to use in targeting emerging markets, but with a $550 price tag, the device is still out of reach for many consumers in those markets. According to market research firm Canalys, India is the world’s third-largest smartphone market, with 9 million units shipped in the second quarter of 2013. However, while Samsung holds approximately a third of this market, Apple has only a 2 percent share.

Bringing back the iPhone 4, which is now unavailable in other markets, helps customers in India who like the brand but can’t afford the company’s newer devices. Apple trade partners who spoke to ET said that the stores will stock the iPhone 4 as well as other older Apple products, including the iPad 2, the first iPad mini, and entry-level Mac computers.

At the end of last month, it was reported that Apple met with Indian government officials from the Department of Industrial Policy and Promotion, an agency that governs the country’s foreign direct investment (FDI) policy, which requires that for proposals involving foreign equity in excess of 51 percent, the company must source 30 percent of its contents from India’s micro and midsize enterprises. Apple is unable to meet India’s 30 percent sourcing clause since it uses very little hardware for its products, it argues. The tech giant has asked for the department to make an exception for Apple, allowing the company to open branded retail stores of its own.

Apparently Apple got what it wanted from those talks, because The Economic Times reports that some of the small retail shops are already set up in two locations of the Apple reseller Currents Technology Retail in the cities of Kolkata and Panchkula. The publication said that Apple will target areas with citizens that have a high amount of disposable income and student populations like Pune, Vizag, Guwahati, Durgapur, and Gangtok.

As India’s middle class grows, the country’s enormous population guarantees that its importance in the smartphone market will increase, as more of its citizens can afford smartphones and as more companies make inexpensive smartphones targeted at consumers in emerging markets. The smartphone market in the first world has almost reached its saturation point, and so smartphone makers will need emerging markets to sustain growth. Apple is hoping that an increase in efforts to get its lower-end, older products into the hands of Indian consumers will earn the company a bigger piece of the pie.

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