Tuesday, 16 April 2013

Can Apple break the jinx in the Indian market ?

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.