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India remains Apple's great untapped opportunity

India remains Apple's great untapped opportunity

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The US giant has only 0.9 percent of India's growing smartphone market

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The latest data from IDC, covering India's smartphone market, provides a rather unusual visualization: a pie chart representing smartphone market share where the iPhone is nowhere to be seen. Sales of Apple's iPhone in India are so vanishingly small that the company ranks 18th among smartphone vendors, with a meager 0.9 percent of shipments. Samsung is the dominant vendor in the country, securing nearly a quarter of the market with its more affordable 4G-capable devices like the Galaxy Grand Prime and Galaxy J2.

idc india

The big shift for Indian consumers now is toward devices with 4G connectivity built in, and shipments of such smartphones have nearly tripled in the third quarter of this year relative to the second. But one thing that hasn't changed is the country's preference for affordable handsets, with the dominant models typically costing $150 or less. At a time when the global smartphone market is finally starting to slow down and stagnate, India is showing some of the best growth around with a 21.4 percent increase in smartphone shipments relative to last year. It's far from the saturated markets that Apple already dominates in places like the United States and Europe, but India's population also lacks the income to be able to afford Apple's current lineup of smartphones.

One solution, which was proposed by Indian Prime Minister Narendra Modi during his meeting with Tim Cook this September, was for Apple to set up a manufacturing base in the country. This would cut down on the company's production, logistics, and distribution costs, and could offer a route to making its devices more affordable. That's what Lenovo has recently done, and the Chinese company has seen a positive outcome in its shipments. Then again, Apple's one consistent strategy across its entire device portfolio has always been to secure high profit margins first, which runs diametrically opposite to India's demand for cheaper hardware.

It's evident from Tim Cook's meeting and from India's still developing smartphone market that Apple has great interest in expanding its business in the country. It recently crossed the $1 billion milestone of annual sales in the country, but for now remains an aspirational brand that very few can afford outside of second-hand markets. How Tim Cook and his team reconcile the vast potential of India's rapidly growing population of tech consumers with Apple's tradition for selling premium devices at premium prices will be one of the more interesting business storylines going forward.

Correction: Cook and Modi met in San Jose; their meeting did not occur during a trip to India, as this article previously stated.