Is Apple Clutching at Straws in India?

Struggling for market share, Apple (NASDAQ:AAPL) is making a shift in its iPhone expansion strategy in India by turning to independent distributors. Apple has sought out Ingram Micro (NYSE:IM) and Redington India to provide distribution channels beyond telecom providers, which in any case don’t provide carrier subsidies and limit most sales to major towns, according to The Wall Street Journal.

Apple’s share of handset sales in India was 1.2 percent in the June quarter, according to IDC, half of its level a year earlier. In the same period, Samsung more than doubled its market share to 51 percent. Samsung, the market leader, already sells its phones through a nationwide network of distributors.

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Apple has earlier worked with distributors in India to market products such as the iPad, but was worried about losing profit margins on the iPhone, its key product, if it had to pay third-party distributors. Apple chief executive Tim Cook has talked about the disadvantage of the high cost of distributing products in India. “We have a business there, that business is growing, but the sort of the multilayer distribution there really adds to the cost of getting products to market,” Cook told analysts in July.

Redington, which has 12,000 smaller partners across the country, confirmed that the iPhone had been added to its product list.

Apple is making the changes as it prepares to launch the iPhone 5 in the country, which analysts say may happen at the end of this month. The phone is likely to be sold at a price between 45,000 rupees ($854) and 50,000 rupees. The launch is also likely to coincide with India’s festival season, which runs from mid-October through December.

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