SOURCE / GT VOICE
India’s smartphone market can’t rival China
Published: Aug 04, 2016 12:18 AM

Illustration: Peter C. Espina/GT



 

The rivalry between China and India - the world's two most populous nations and two giants of Asia - seems to have extended to the swankest and most high-profile segment of the smartphone market, with India grabbing headlines as the one shining spot in an overall gloomy global sales landscape, China included, for Apple's iPhone.

But this is far from a sign that India is supplanting China in the global smartphone battlefield.

The much-loved iPhone, which debuted back in 2007, has almost single-handedly catapulted Apple to star status in not only the mobile phone arena, but the tech world at large. Nevertheless the Cupertino-based tech giant now has cause for concern after iPhone sales continued to drop in its fiscal third quarter ended June. The company sold a total of 40.4 million iPhones in the quarter, slightly above market estimates, but which still translates to a 15 percent fall from the year before.

This has certainly affected Apple's latest quarterly earnings, although an uptick in revenues generated by its services division helped the company narrowly beat market expectations. The fact that the company's revenues in the Greater China region fell by 33 percent year-on-year in the past quarter undoubtedly created a dent in Apple's iPhone-dependent revenue tally. In the fiscal second quarter this year Apple's Greater China sales fell nearly 26 percent. A year ago the company's revenues in China hit 112 percent growth in the fiscal third quarter of 2015. However, mounting fears that iPhone sales have hit a wall appeared to be soothed by the dazzling growth in India. India was a rare bright spot as sales of Apple's iconic handset soared 51 percent year-on-year in the market over the first three quarters of the fiscal year, according to Apple CEO Tim Cook.

Therefore, it's fairly understandable that the iPhone maker has put an increasing amount of  emphasis on the Indian market.

During a conference call with investors, Cook maintained that the company remains "very optimistic about the long-term opportunities in greater China." At the same time, Cook seemed to pin greater hopes on India, noting that the South Asian country has "huge potential" at a time when his company looks to add India to its global retail store map.

That said, India is certainly prime for vibrant growth in the smartphone arena, with only about one-fourth of its population currently having smartphones, in stark contrast to China where smartphones have come close to achieving market saturation. More importantly, sweeping policy changes recently introduced by the Indian authorities have eased foreign investment rules, fueling hopes for the likes of Apple to launch their retail outlets in the world's second most populous nation.

But for Apple, India might be not much help as the company seeks a genuine upturn in iPhone sales in the foreseeable future. It will be a tough, if not impossible, task for Apple to achieve any remarkable near-term results in India since it now holds only 1 percent of the market.

Even with targeted plans of selling refurbished iPhones the tech company may not be able to crack the extremely price-sensitive market. While Apple might be one of the most sought-after brands in China and India, replicating the iPhone fever that turned the gadget into a status symbol in China is less likely to occur in the Indian market. Rather, over time the huge population may all be smartphone users, but not necessarily iPhone users, as the case of Ringing Bells points out. The local maker of a $4 Freedom 251 smartphone has already earned great interest in the Indian market.

According to local media reports, the start-up, which aims to make a mark in the local smartphone market, claims that registration for the incredibly low-cost phone from about 18 states in India has reached 7.5 crore, or 75 million, nearly double all global iPhone sales in Apple's last quarter.

What concerns the company is apparently deliveries for the phone, considering that the more sales Ringing Bells achieves, the bigger losses it will face as the retail price is considerably below the actual cost of churning out the phone.

In Cook's own words, India is "where China was maybe seven to 10 years ago," he said at a earnings call in April. Now the question is whether Apple will be patient enough to wait for India to become the next China. Until that happens, it is unlikely that China will be truly challenged by India in the smartphone world. After all, it takes time to expect actual needs to be translated into real consumption, let alone higher-end buying.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn