I have a question for all my readers. What do you look out for while buying a new smartphone? I bet at least 50% of us will say that they look out for the price of a smartphone. This is especially prevalent in the Indian market which ranks on the higher side of price sensitivity. There is no doubt that India’s economy is one of the fastest growing in the world. With a potential of 1.3 billion consumers, why is Apple struggling in India?
It is true that Apple’s sales have grown stagnant. But, the thing is Apple is still selling almost 3 to 4 million of its products in India. Which to me is a huge number. But compare it with its more affordable counterparts, you will see a huge difference in sales. This brings me back to the basics. There are 2 ways by which Apple can sell its products. Its either someone buying an apple product for the first time or shifting from their competitor, or, the person is upgrading their current Apple product.
One vital thing to be noticed here is the 2nd point. When I say that a person is upgrading to a newer product, I a pointing on a cycle. You see most of the Android smartphones have a decent lifetime of 2-3 years. But, buy an I-Phone, you will easily be able to run it for 4-5 years. Now, compare the lifespan of these smartphones, you will see a difference. An Android smartphone making company can easily clock 2 times the cycle of sales than Apple. This would mean that the android company would generate a steady levels of profit within a cycle.
Now compare this cycle to the sales of the smartphones. This is where you will notice why a smartphone company like Apple is struggling in India. To counter this Apple took various desperate measures like increasing number of models and adjusting hardware and software to the market specific features. Well, all of these are just helping them to survive in the market.
This brings me back to the question I had put forward to you. You see Apple’s products are expensive here. If a iPhone would cost around $1000 in the USA, then chances are, it’s going to sell in India for almost $1700-$1800. Although price is one of the issues behind Apple’s such high pricing. One of the major reasons behind this would be import tariffs. Apple manufactures most of its products in China. When the final product is brought into India, Apple has to pay huge import duties in order to meet consumer demand.
With the Covid-19 in full action, many companies have pulled out of China. Apple in particular has seen this opportunity to set up a factory in India to try and mitigate those import duties. But, India doesn’t have much of high skilled workforce, which adds on to the cost bore by Apple. In my opinion, Apple should take this burden. Although they might struggle in the short run but I am confident that in the long run it will reap benefits.
If you enjoyed reading this post, a like would be awesome. Comment below your thoughts on Apple and its sales and let me hear your stories too. If you are new here, do drop a follow. Check out my previous post here. You can now follow me on twitter as well. Stay tuned for more posts by The Antique Economist. This post is the 3rd article of my series: Economics Behind. This series will talk about various day-to-day things we may or may not notice and find an economic connection to it. Hope y’all like it.