Apple has failed to make the most of the lucrative festive season in India. It is during this period that most smartphones are sold in India and so most OEMs try to make the most of it by offering attractive deals or launching new models. Despite launching the iPhone XS and iPhone XR though, Apple failed to attract Indian consumers this festive season.
An in-depth report from Reuters reveals how the high price tag of iPhones is making consumers look for alternatives from Chinese brands like OnePlus. The iPhone XR starts at Rs 76,900 ($1,050) while the OnePlus 6T with 6GB RAM and 128GB of base storage is priced at Rs 37,999 ($520). The iPhone XR was expected to do well in price sensitive countries like India but the device has failed to do as expected.
Analyst firm Counterpoint Research believes that iPhone sales will decline to two million units this year, down from three million units a year ago. Apple’s newer models have failed to do well in India thanks to their exorbitant price tag, with older models like the iPhone 6 and iPhone 7 still doing well thanks to their low price tag.
The high price tag of new iPhones in India can be blamed on the high import duties that Apple has to pay to the Indian government. To promote its ‘Make in India’ scheme, the Indian government has been steadily increasing its tariff on various smartphone and electronic components. The import duty was initially 5 percent but it has now steadily increased to around 15-20 percent. This has led to major smartphone companies like Samsung, Vivo, Oppo, and even OnePlus to set up manufacturing and assembly plants in India. This allows them to save on various duties — a benefit which they are then able to pass on to consumers with the final price of their devices.
Apple’s manufacturing partner Wistron has an assembly plant in Bengaluru but it assembles older models like the iPhone SE and iPhone 6. As per analyst Navkendar Singh of IDC, Apple simply does not have the confidence in the Indian manufacturing system to set up plants and move manufacturing and assembly out of China.
A change in Apple India’s leadership earlier this year is also being blamed for slow iPhone sales. Apple has reduced its distributors from five to two in the country and the new head of India’s operations Michel Columb is still working on improving business relations since taking charge of the operations late last year.
While India is an important market for Apple, the company is unlikely to do well here until it reassesses its iPhone pricing strategy.