Here's why Apple’s problem that began in China may spill over to India too

• The size of smartphone markets around the world is shrinking and India seems to be only market poised to grow.
• Even Xiaomi, the chinese smartphone manufacturer, is facing trouble with its IPO at home with its stock falling 18% in just three days.
• Apple, though never wanting to compete at price, may have to rear up for a more competitive market in India.
• More competition in the Indian market may be good news for smartphone consumers since it could indicate cheaper prices in the coming years.

Apple’s stock has declined 3% in the since the company’s announcement on January 2 of a sharp slide in the sale of iPhones in China. The rout in mobile phone sales in China has affected everyone from local brands like Xiaomi to foreign brands like Samsung. In fact, Xiaomi faced a loss of $6.2 billion after experts projected a further slowdown in China sales.

And that may drive these phone makers to the next biggest market, India, which is already a market with hyper competition.

At a time when global mobile phone sales are declining, smartphone shipments in India reached an all-time high in the third quarter of 2018. Top brands in India - including Samsung, Xiaomi, and Oppo - recorded their highest ever shipments in a single quarter during the local festive season, while the holiday sales in US tanked.

The falling Indian rupee had made imports more expensive in dollar terms but that did not affect the sales.

Despite that Apple's iPhone shipments over 2018 shrank to half of what they were in 2017 according to Counterpoint, making the last year its worse performance since 2014.

The smartphone market has shrunk 3% globally and the US market showed an annual decline of 7% in 2018 according to Counterpoint’s report. The same report has said that the Indian market is going to continue to grow while the Chinese and American markets will decline.

The official government statistics and even estimates from Canalys show a fall in sales in China between 12% to 15% in 2018. The Canalys report further predicted that the situation is only going to worsen estimating another 3% decline in 2019 with sales going below 400 million devices for the first time since 2014 in China.

The South Korean brand, Samsung, has taken twice the hit. Not only are its own sales down in China but there’s a reduced demand for its chips and screens since its the supplier for Apple and other smartphone manufacturers.

India calling

As the challenges in US and China mount, it’s an opportunity for Chinese smartphone brands — especially since four of the largest smartphone manufacturers in India are Chinese — in light of the US government’s increased restrictions on companies like Huawei, giving them an additional reason to shift their focus to India.

This is great news for Indian consumers as the increased competition is likely to usher in cheaper prices.

In India, Samsung and Xiaomi have thrived competing for the top spot for market share. Navkendar Singh and Upasana Joshi from the International Data Corporation told VentureBeat, “A good performance in India could help Xiaomi, OnePlus, Huawei and other Chinese phone makers do better in other global market.”

They added, “Those who can sustain and grow their businesses in India prove to the world they can handle large and tough markets.”

The ‘Make-in-India’ campaign giving an impetus to foreign manufacturers to set up shop in India is allowing the smartphone brands to keep their prices low with local manufacturing. Even Apple has announced that it’s going to start assembling its high-end iPhones in India.

Jayath Kolla, one of the founders of Convergence Catalyst, feels that the strategy the brands applied goes beyond just local manufacturing.


But, will high-end phones in India give Apple the fillip in sales it needs? Indians are famous for being penny-wise and the cheaper Chinese models may eat into Apple’s potential sales.

Apple’s expensive iPhones already have a measly market share below 2% in India, and have been steadily trending down.

So Tim Cook will probably have to re-think his stance on selling iPhone cheaper than what they are, if he wants to make any further headway in the Indian market — maybe pegging its hopes on higher security like its billboard hoarding at CES 2019 seems to suggest.

See also:
Still unable to bring Apple Stores to India, Apple is planning flagship outlets instead

‘Made-in-India’ Apple iPhones may get cheaper but they probably won’t be cheap enough for Indian users

Apple is failing spectacularly in one of the world's biggest smartphone markets