News of Apple’s decision to intensify its focus on Indian markets comes as other smartphone powers are looking to grow their shares of that country’s mobile users. Franchisees of Apple’s “exclusive stores” reported to India’s Economic Times that the company will triple its retail presence in India, increasing its number of such stores to about 200 by 2015.
The Apple retail shops in India are operated by licensed franchisees and sell Apple (NASDAQ:AAPL) products exclusively.
Apple’s move makes sense when viewing the mobile landscape—earlier this month, head of IT and mobile business with Sony India, Sachin Thapar, estimated that the size of the country’s mobile smartphone sales were about 3.3 crore (33 million) units per year, growing at a rate of about 70%. Sony announced it would spend over $55 million dollars to market its Xperia brand in India.
Look for smartphone popularity to increase in 2013, as India’s carriers completed upgrades to its 3G infrastructure last year and have since made sizable cuts to data plans.
Apple’s commitment to India markets comes in a moment when its retail power, though acknowledged and respected, is being called into question amidst challenges by its chief smartphone competitor, Samsung.
Forbes contributor Haydn Shaughnessy writes that the Korean technology company opened its first Samsung Mobile Brand Store” in Delhi last year, and a concept store in Pakistan, among activity in other emerging markets like Russia and China. In Samsung’s Indian adventure, the company represents about 38% of the market, in terms of smartphone’s shipped to the country. Apple? About 15.6%, up from about under 4%
the previous quarter. Now, full disclosure: I own several shares of Apple stock and it should be, I suppose, positive to see that type of growth, but those figures are based on sales from October to December—a season in India marked by festivities, weddings and gift-giving. Apple may be gaining some ground, but take those figures with a grain of salt.
Apple’s increased retail presence in India is not just about mobile smartphones, as the “exclusive stores” sell all types of the company’s products, but given tougher competition from other products in the smartphone and tablet space, it may not be able to rely on its brand panache to win over new users. Also, Android's hold on the country's OS market is stronger than Apple's.
Competition aside, Apple has had difficulty establishing the retail presence it’s known for in the United States, as exclusive, company-owned stores must source 30% of their goods from local vendors, as mandated by the Indian government. The company’s decision to connect to consumers via new franchisee shops is probably its strategy to get around that roadblock. In fact, Apple has decided to have its franchisees upgrade their stores in a manner befitting Apple’s retail store designs. The company even intends to reimburse its franchise owners for the alterations.
