In
the book “Pepsi to Apple”, John Sculley, who had been the President of Pepsi
from 1977 to 1983 & CEO of Apple Computers from 1983 to 1993, has recounted
a very interesting episode of his interaction with Steve Jobs. Steve, who desperately wanted John Sculley to
quit his job at Pepsi and join Apple as the CEO, agreed to pay him $1 million
in salary, $1 million as sign up bonus and $1 million in severance pay. But
still John was dithering to leave his high profile job at Pepsi. It was one sentence from Steve Jobs that
changed his mind and decide that his future lay at Apple --- “Do you want to
spend the rest of your life selling sugared water or do you want a chance to
change the World?”
Apple
Computers has always been admired for innovation, classy product line and
awesome advertising. Apple was the first to make the GUI interface popular by
launching the Mac OS. It was the first to launch UNIX based OS X (operating
system) for personal computers. The other great innovations of Apple include
the iPhone, iPad, iPod and the iTunes Library. The ITunes Library currently has
7,75,000 Apps, out of which 3,00,000 are native to Apple (as on January 2013).
Apple
has also been traditionally known to create dazzling and eye capturing ads. The
ad campaign titled “1984” ran during the Super Bowl games in 1984 has been
named by Advertising Age as the commercial of the decade. The Apple Ads have
mostly targeted people who are smart, think out-of-box and look for innovative
and cool gadgets. So it was quite a surprise when there was a series of Apple
Ads in the front page of almost all leading daily newspapers in India that
hardly spoke about the features of iPhone, but very prominently pronounced the
discounts and exchange offers that the customers could get on buying an older
version of iPhone --- the iPhone 4. The
IPhone 4 set was first being offered for Rs 26,500 and now Apple has topped the
proposition with a Rs 7,000/- exchange offer.
So
why has Apple abandoned the strategy of focusing on innovation and started a
price war in the Indian smart-phone market? To understand this, we need to look
at the historical perspective of how Apple has viewed the Indian markets.
During the previous launches, the iPhone used to cost 30% more than that in USA
and customers had to wait for nearly six months to a year to get the delivery
of their smart-phones.
But
now, with Samsung having overtaken Apple in the global smart-phone market with
the frenzy being built around the Samsung Galaxy phones, Apple has become
focused about getting a firm foothold in the Indian market. Around a year back,
the iPhone did not have a place among the top 5 smart-phones shipped to Indian
customers, today the Apple iPhone commands a market share of 15.2%, and ranked
number two after Samsung who has a market share of 38.8%, as per data released
by IDC.
So,
the discount strategy and the exchange offer have actually brought the mojo
back into the demand for iPhones. The iTunes Store launched with Indian content
and localized prices is also pushing up the sales of the Apple devices. The
next strategy of Apple, of course, would be to increase the reach by signing on
more distributors and giving more priority to the Indian customers during the
launch of the next exciting model which would, in all probability be christened
as iPhone 5S.
But
rivals like Samsung, Micromax and Karbonn are working on their strategies to
recapture the market share taken away by Apple. Samsung has already made a
strong impact on the smart-phone market with the newly released Galaxy S4. In
addition, they have started an EMI scheme and 15% cash back on the Galaxy range
of smart-phones to woo the lower end of the mobile phone users to upgrade to
high end smart-phones. They retaliated exactly in the same manner of Apple by
putting up these offers on the front page of leading newspapers as full page
advertisements.
In
the meanwhile, Micromax has created a stir in the smart-phone market by
launching the Micromax Canvas HD. The Canvas HD was launched with exciting
specifications like 1.2
GHz quad-core processor, an eight-megapixel camera and a five-inch touch-screen and a low price of Rs 13,990/- .
This model was completely sold out within 2 days of launch . Micromax had to
announce a waiting period of 24 days and also increased the price of the model
by Rs 1,000. Now Micromax is gearing up to launch the Canvas model in 3D
format.
Karbonn,
which was a fringe player in the smart-phone market, saw their fortunes rise
when they bravely offered subsidized data packages from service providers like
Airtel. This was in stark contrast to the global business model where handsets
are sold at subsidized prices by the cellular service providers. Karbonn
offered customers 500 MB of 3G data from Airtel free for six months when they
bought their branded handsets. Karbonn has also created excitement by launching
the Titanium S5 which will compete against the Canvas HD of Micromax at a price
point of Rs 11,990/-. Karbonn is now ranked fifth in terms of volumes shipped
into the Indian smart-phone market, as per data published by IDC.
Whatever
be the developments, the Indian mobile phone users will soon be spoilt for
choice with a huge number of exciting models being launched by the Indian as
well as the multinational companies. The Indian consumers will have a plethora
of brands to choose from as per their needs and as per their budgets. And the
Indian customers are sure to be pampered with an early availability of the
iPhone 5S model.
