Can Apple Catch Up to Samsung In This Key Market?
As evidenced by the widening technology war being fought between Apple (NASDAQ:AAPL) and Samsung (SSNLF.PK) — which has grown to include smartphones, tablets, and possibly even watches and televisions — when one company makes a step, the other soon follows. It may be tough for Apple to catch up to the lead Samsung has carved out in India, but as its market share has grown to over 38 percent and the country accounted for 10 percent of net sales in the past two years, Apple is looking to expand.
Apple has announced plans to triple its presence in India that will see the number of its exclusive stores grow to approximately 200 by 2015, according to The Times of India. But regulations in the country require single-brand foreign retailers to source 30 percent of goods to be sold from local vendors. As the company does not currently manufacture any of its products in India, this clause in the country’s legal code has made it difficult for iPhone maker to open its iconic Apple stores.
Now there are “Apple Shops” located inside other retailers as well as a network of more than 65 exclusive Apple stores owned and managed by franchises. It is this second category of store type, known as Apple Premium Resellers, that the company plans to expand upon, and Apple will pour funds into these new locations to model them in the image of its glass-shelled Apple Stores that populate many countries throughout the world. The redesign will cost about 1 crore rupee ($184,000) for each store, reported the publication…
For many years, India has been a low-priority market for Apple. As Tim Cook has said several times previously, the company has much less business potential than China. But rapidly growing sales of iPhones and iPads and strong competition from Samsung in the United States and other traditional markets, has prompted the company to seriously consider the country as an important new growth market. The iPhone’s share of the smartphone market grew to 15.6 percent from October to December, an increase from 3.9 percent in the preceding quarter. This growth was led by a few strategic initiatives launched by the company, including a policy that allowed consumers to purchase phones without accompanying voice plans.
Plans are already moving forward; Hugeues Asseman — Apple’s vice president of sales for Europe, Middle-East, India, and Africa — visited Mumbai last month and meet with key trade partners and franchisee owners to discuss the expansion, stated the Times.
A massive advertising campaign is underway as well, and Apple has begun to offer iPhones on equated monthly installment scheme. This payment option allows the company to compete with Samsung, and other smartphone manufacturers, on more even footing as they offer devices at the much lower price-point of $100. Previously, the high cost of the iPhone hampered Apple’s ability to compete with other manufacturers. At Reliance Retail, Apple’s largest premium reseller in India, the iPhone is the second-highest revenue grosser after Samsung Galaxy Grand.
However, even with the expansion plan and a lower-cost phone rumored to be coming up Apple’s product pipeline, to catch up with Samsung, the California-based company has a tough road ahead.