Apple is targeting Rs 1,000 crore from the sale of iPhone in India this quarter, about twice the revenue from the sale of iPhone in the same quarter previous year, reports Economic Times. The company is expecting iPhone 4 owners in India to trade up to iPhone 5s — currently priced at Rs 53,500 for the 16GB model, Rs 62,500 for the 32GB one and Rs 71,500 for the 64GB handset.
To meet this target Apple will need to sell about 2 lakh iPhone 5s or 4 lakh iPhone 4 in less than two months. What is giving company so much hope is the fact that iPhone 5s was a big hit when it released in India on November 1, with Himanshu Chakravarti, chief executive of The Mobile Store saying that iPhone 5s led the sales during Diwali. The device is sold out in most locations and the company has requested fresh stock to meet the demand.
Apple has also launched a Rs 25 crore ad campaign in India for the iPhone 5s and 5c in partnership with distributors Redington and Ingram Micro, along with telecom partners Reliance Communications and Bharti Airtel.
Samsung’s still leads
During the Q2 of 2013 Apple sold 200,000 units and 150,000 units in Q3 according to Canalys. Most of this sale was attributed to that of the older 4 and 4s models in India and the three-years old iPhone 4 was sold at a lower price point with zero-interest schemes and buybacks.
Samsung on the other hand, had 26% smartphone marketshare during the same quarter according to IDC, which brings up Samsung’s smartphone sales in India to 2.4 million approximately. It is followed by Micromax with a marketshare of 22% and 2 million units sold. Sales of smartphones in India rose three-fold in the same quarter, with shipments growing over 50% sequentially and phablets with screen size between 5 and 6.9 inches cornering 30% of total shipments. However, much of this growth was driven by sale of devices in the $150-$250 segment that is dominated by Micromax and Karbonn.
India profits decline
Considering India has traditionally been a price sensitive market, Apple might not be able to catch up to the volumes that Samsung and Micromax are getting here. Analysts had initially estimated that Apple’s India revenues would hit $1 billion in FY2014, but now they say it’s unlikely, despite the demand for iPhone 5S. In 2013, Apple’s profit dropped to Rs 112.66 crore from Rs 311.5 crore, according to the company’s Registrar of Companies filing. Sales at the Indian arm rose 51% to Rs 3,030.11 crore. This was in sharp contrast to its FY2012 performance, when revenues rose 223% to Rs 2,003.9 crore and net profit shot up 431% to Rs 311.5 crore.
Apple attributed the decrease in profits to aggressive marketing efforts that finally lead to increased sale of older devices. The company sells most of its devices through franchisees and it plans to increase the number of exclusive stores from 65 to 200 by 2015. Indian Government had allowed 100% FDI (Foreign Direct Investment) in single brand retail stores, Apple CEO had later dismissed this and said that the company has no such plans in India yet. Even if the company plans to open a retail store in India in the future, it would have to adhere to the 30% local sourcing clause in the regulations, which mandates companies to source at least 30% of the goods to be sold from local partners. Since Apple does not manufacture any part of their device in India, they will have to continue their operations through these franchisees.
Apple is hoping they will be able to meet the target by convincing iPhone 4 users to buy the new device. That will be quite an upsell unless the company launches a buy back scheme exclusively for Indians who already own iPhones.
To put things in perspective, iPhone 4 (8GB) currently sells for Rs 29,000, while an entry-level iPhone 5s 16GB is priced at Rs 53,500. If Apple offered those who bought an iPhone 4 or 4s in the last year, an iPhone 5 at a buyback they just might succeed. There might be a lot of people who will trade the older device for the latest one as long as they don’t need to pay more than Rs 30,000 extra.