Marketing blitz, discounts fail to sustain Apple iPhone sales in India

BANGALORE: Smartphone maker Apple has seen a sharp fall in its India sales during the first three months of 2013, a trend that analysts say might persist as the California-based company looks to make deeper inroads into world's third-largest smartphone market.

Sales in India had soared soon after the November launch of iPhone 5, the latest iteration of Apple's smartphone. In an uncharacteristic move, Apple followed up with a sustained marketing campaign, advertising discounts schemes and monthly instalment options for customers in India, where its phones are seen as too expensive.

"The October-December quarter was an exceptional one for iPhone, but that hasn't been the case since then," said Manasi Yadav, who tracks India's smartphone market for researcher IDC. According to IDC data, iPhone sales have been on a downward trend after the robust sales in response to the marketing campaign and financing schemes.

Between January and March, Apple sold some 120,000 iPhones in India, down from the 230,000 in the October-December quarter of last year, according to IDC. That translated into its share falling from 4.7% to 2.1%. In India, Apple faces competition from South Korean rival Samsung as well as local brands such as Micromax and Karbonn, all of which are among the top three in terms of market share.

Apple did not reply to emailed queries seeking its views.

"The initial buzz around Apple is over," said Faisal Kawoosa, analyst at market researcher CyberMedia Research, who remarked that iPhone sales have been falling in the past two-three months as well.

Samsung, which has a 40% share of the smartphone market in India, had responded to Apple's marketing and sales moves with its own offers of discounts and financing schemes.

Even globally, Apple has been facing increasing criticism about the absence of new device launches that could help the company continue its popularity among users.

Since the launch of iPhone 5, the company's stock has fallen nearly 40%. Analysts have also been awaiting clarity from Apple's management about its strategy to gain in emerging markets such as China and India.

Research firm Strategy Analytics estimates that nearly 10 million smartphones were sold in India during the first three months of 2013, making it third-largest market after the US and China.

Apple's slowdown is also impacting its large national distributors such as Redington, which sold some Rs 1,100 crore worth of iPhone in the last five months of 2012. An analyst with a foreign brokerage that tracks the Chennai-headquartered distributor said that he estimates this to fall to as low as Rs 800 crore in 2013 on account of waning demand for the device. Sales of iPhones make up some 7% of Redington's revenue.

According to Kawoosa, the discounts and EMI schemes may have affected Apple's brand image among high-end smartphone users. "Apple has a certain image and it is not the sort of brand that gives you huge discounts. I think they went after market share at cost of diluting brand value and this was clearly a short-sighted strategy."

Source: http://economictimes.indiatimes.com/tech/hardware/marketing-blitz-discounts-fail-to-sustain-apple-iphone-sales-in-india/articleshow/21111896.cms

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