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Summary:

Apple, long a laggard in India is waking up and wants to make a stronger push into the country by planning to team up with retail chains and open stores-within-stores in small towns, a report says.

Apple is planning to enter small towns in India and open many “stores” in the country, according to a report in the Economic Times, an Indian business newspaper. Apple, the report said, is looking to expand beyond the big towns and is planning to team up with retail chains and create stores-within-stores.

The company met with management of twenty major retail chains and wants to set-up 100 stores in 50 smaller towns, the report adds. A report earlier this year said that Apple wanted 200 of such small stores by 2015. Apple, at present, has no official Apple stores in the country. Apple will sell its iPhone and iPad product lines (along with accessories) at these stores. Apple wants to bring in $1 billion in sales in India in 2013.

Apple, has remained too enamored with China for too long, and has missed an opportunity in India. I said so in a post in February 2013 when I went to visit my parents. Apple’s rapid push comes at a time when the Indian economy is going through a major slowdown. It would be a challenge for Apple to grow its presence and sales amidst an economic downturn, but there is some good news: in 2012, Indians bought 19 million smartphones. And data from IDC shows that by 2016, that number of smartphones sold to Indians will be around 108 million. Samsung, currently is the clear market leader in India with about 36 percent of the smartphone market, while Apple’s share is somewhere between 2 and 5 percent, the paper adds.

  1. These stores will be co-branded stores I guess as full owned Apple stores in India are NOT possible thanks to the government regulations.

    Apple already has co-branded stores with Reliance (iStore India) and Remington. They are probably just looking for more stores to cover every corner of the country.

    It doesn’t matter how many stores they open though. After-Sales service of Apple products in simply inexistent in India. Once an Apple device is out of warranty, it is as good as a piece of brick even if it requires a small repair. The devices are really expensive too.

    Samsung on the other hand has devices at every price point – from 20$ phones to 700$ smartphones to cater to every market segment in India. So they are successful. When we talk about smartphones getting sold in India – we conveniently overlook the fact that most of those smartphones are in the 200$ price point or roughly 10 to 12 thousand Indian rupees. (Samsung, Micromax, CellKon are the leaders in this space). The market for phones that cost 50 thousand rupees (900 dollars) is still abysmally low. A person spending 900 dollars on a phone – will get it anyhow from a city where Apple products are available.

    I don’t see the opening of new stores by Apple helping them in expanding their market share in India. Most smartphones in India are 10-12K or at most 15K. Unless Apple has a device in this bracket, it is not going to go anywhere.

    Regarding the other devices, iPad is terribly expensive – when you are can get cheap Android tablets for less than 100$. Yes, the user experience is not the same. But it gets the job done. One of the USPs of iPad or any Apple device is its iTunes integration. iTunes in India is a big joke. It doesn’t have the ecosystem of content to justify its price tag.

    Let us see how it pans out.

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  2. Opening additional stores isn’t going to help Apple, as long as it keeps charging an arm and a leg for its products in India, while selling it cheaply in other countries. People will continue to import Apple products, rather than buy locally.

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    1. @Indian,

      It is not selling it cheaply in the other countries. In fact you pay more in the US than what you pay in India for an iPhone5. The only difference – you pay it over 2 years unlike in India where you end up paying for it up front.

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      1. No. It sells at a higher price in India. Certainly at the time of release.
        And in the USA it’s not like only contracted iPhones are sold. Apple sells without contract too – at full price!

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        1. Care to provide some numbers to justify your claim of Apple selling the devices at a higher price in India? Don’t forget the import duties levied by the GoI

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  3. They are not going to achieve this until:

    1. they fix their selling and take matters into their own hands (I disagree with Vedam on this as I don’t think it’s Govt’s issue, Samsung does it. Sennheiser does it..etc)

    2. they fix their service and support. As Venu has nicely put it just doesn’t exist. My friend had a slight heating and screen problem. He waited as he was to leave for USA in 2 weeks and he got it fixed in USA rather than in India. Because he knew that there idiot Apple service tie-up guys would have sat on his Macbook Pro for at least 2-3 weeks anyway. At home support is now norm in India(at least in laptop segment).

    3. Income of Indians and makes it hard to form a cult-like following as in the west. We look for value for money and practically don’t give a fcuk whether one Sir Ive sang paean in the launch video in his “special” voice. For us he is just a guy with an odd and maybe creepy way of speaking. Point being we are not “fans”.

    4. Bring the prices at par with the USA and western countries. Tax or whatever, Apple sells it products at a higher price in India.

    5. People probably don’t see the reason why they should buy a phone at $750 when it does less than what a $300-400(or even less) galaxy or nexus does. And they are not wrong. That “Apple is class” factor is not seen in India in terms of western visibility.

    6. $100 dollar is $100 dollar for the west but it’s INR 6000 here which too big a sum for someone who earns less than $8000 or around or less an year(most of the people who might consider an iPhone). People who are “rich” will buy anything anyway.

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    1. >>I disagree with Vedam on this as I don’t think it’s Govt’s issue, Samsung does it. Sennheiser does it..etc

      Unless Apple sources 30% of an Apple Iphone from India (Software or hardware) it cannot setup a completely owned store in India – as per GoI regulations.

      Samsung qualifies for this as they have a huge development and R&D arm in India. I don’t know about Seinheiser.

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  4. India has recently eased some of the regulations for FDI in single brand retail. http://www.livemint.com/Industry/3CoipkPeRUTVSSpEnxxVrI/Singlebrand-retail-scene-in-India-more-encouraging.html

    Apple seems to want non-co-branded mini Apple stores in more places in India. I think this is a very good move by Apple, not based on the current economic/political situation, but looking at whats coming in the future. India is poised to dump the incumbent government (for its archaic policies, rampant corruption, anti FDI regulations) and the best option to replace it (Narendra Modi) is known to work wonders with attracting FDI to his state of Gujarat (the state where Modi is the Chief Minister).

    Other than being in the right place before the ‘right’ government kicks in, its also worth noting the growth in the sale of Audis, BMWs, Mercs, Land Rovers etc in India, its growing faster than ever (not sure if it matches the growth rate in China). Many of these luxury car makers have reps in non-metro cities of India, to net the high networth individuals (HNI). Venu Vedam’s argument here would be that there is no market in India for cars costing >$25,000 (sells in India ~ INR 2,500,000 or 25 lakhs after tax and duties)

    Same thing is happening with the motorcycle segment. 10 yrs back, people would be shocked to spend more than INR 50k on a motorcycle. Now, motorcycle companies are releasing bikes in the range of INR 100 to 300K ($2.5k to $7.5k)!

    I am not denying that there is a huge market for <$200 smartphone. But, there is a huge untapped market for $600+ smartphone in India. Samsung, Micromax and CellKon can/will compete in the <$200 market.

    In a society that loves to show off and an economy that runs mostly on black money, owning a $650 iPhone (I guess after duties it'll ~ $900) will be a status symbol worth buying. There's only so much gold people can wear. After that, you flaunt iPhones ;)

    Apple has done enough progress with the Indian iTunes store, which was one of the biggest blocks for Apple to go all in on expanding in India. Many people don't realize the export/import regulations an iTunes store for a country has to go through, especially in a country like India, with such well known system of Jugaad. With that iTunes store set up and running, the next obvious step is franchised Apple Stores in India.

    I can disagree to most points made by Venu Vedam. I'll let Apple's earnings report prove one of us wrong.

    Way to go Apple!

    -Fanboi =)

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    1. I guess you misunderstood my point. Those who can afford it in smaller towns, will anyway get it – whether there is an Apple store there or not. Opening more stores is not going to help the sales in smaller towns.

      My town has a number of BMWs and Audis. But would the number of BMWs increase in my town if BMW opens a showroom there? Highly unlikely.

      And, single brand retail – 100% FDI – applicable only if 30% of the good you are selling is sourced from India. Apple cannot set up a store in India without any tie-ups. At least not right away.

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      1. Even in US, anyone can order any Apple product online and have it shipped direct to home. Why does Apple still try to have Apple Stores? You are totally neglecting the importance of showrooming, that helps people get to know the product better instead of just looking at someone using it. It pushes the prospective buyer to part with the money after having been able to use the product for some time (here’s a recent article that sheds the importance of showrooms for product research http://pandodaily.com/2013/09/30/showrooming-is-more-about-research-than-price-comparison/)

        Those who go out of their way (i.e., go to the bigger city to get the phone) form a tiny percentage of the whole market that Apple can tap, hence the non-metro city Apple Stores.

        I am not aware of the specific differences (and hence the effect of 30% sourcing rule) between the franchise model, compared to the Apple owned/operated stores and co branded stores (like the Reliance iStores).

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  5. There were good reasons Steve Jobs kept Apple out of India. Apple is about to discover those reasons. Sure Apple products work well but Indians are not Americans.

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  6. I am an Apple Authorised Reseller Associated with Apple for around 8 years from India.I have read the earler piece written by Om Malik also about Apple and India.I am also an avid user of Apple products.We also sell competing products from Samsung,Sony etc.I have some points to make.

    1.As you know Apple products dont sell on specs.The objective of Apple in opening more stores is to give the customer a touch and feel of the product.It will help people make a choice by having first hand experience rather than reviews which is biased towards specs rather than user experience.

    2.Actually people telling Apple is pricing their products very high in India is wrong.Apple prices their products at par with their international unlocked prices.Because of the decline of rupee sometimes it is cheaper to buy in India rather than in US.To be honest Apple is not after marketshare.

    3.One point to be noted is Out of Warranty service for Apple Products is non-existent .But that will change soon with many enterpreneurs entering that business. http://www.irepair.in is an example.

    4.Itunes store pricing is very good for foreign titles.For example I bought the entire Pink Floyd collection for around 8 USD.Another example is I was able to buy the entire English Premier league games live pack from itunes at about 9 US Dollars.

    5.Samsung has got 36% market share in India because they were good at marketing the Android Ecosystem.Their phones with Bada have failed miserably.Now they are facing competition from XOLO,Micromax,Carbon etc.Sony and LG have also stepped up in India.So that market share will be gone very soon.

    6.One thing nobody mentions when criticising Apple is the satisfaction they give to the customer.As a person who interacts with customers on a daily basis ,I could assure you Apple will be growing in India every day

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  7. When you talk about Out of Warranty for Apple Products, its absurd, as its same across the globe not just in India.

    Expansion is helping Apple and indeed they will share a bigger Pie soon, If products are easily available & sold in India than comes the question of Servicing them. Let them concentrate on Sales for now which they are doing fabulously well, Services will follow gradually.

    How about services with other Brands call it Samsung, Nokia, etc they repair the product wherein Apple replace it.
    Lets not under estimate power of Indian Market for such Big brands, they have been doing great business since last one decade and its growing too fast.

    Economists are not Morons prdicting India as a second biggest market.

    Every Indian is raisng their standard of living, thus demand is ever rising in India.

    iTunes is never issue for Apple based TG, if you are person still to

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  8. Has anyone tried store-within-a-store in India in the manner that Samsung is doing it with Best Buy in USA?

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  9. All Apple products have international warranty except iphones, i guess @venu vedam was talking about his phone which was jail breaked and bought from the grey market.

    I never saw any such problem with any devices i bought in india. So i think this could work out.

    Regarding the 12-15 K phones mr vedam is right , thats the biggest market because one of the highest cellphone users are youngsters, and thats all they can afford with there pocket money. But increasingly a lot of youngsters specially software people use mac, and iphones, many get introduced to it through work. App Development is really big around the world and india has its part to play in the global app eco system.

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