Apple and BlackBerry Fight It Out for 5% in India

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BlackBerry (NASDAQ: BBRY  ) launched its new Z10 smartphone in India earlier this week in hopes of tapping into one of the fastest-growing smartphone markets in the world. But the company is facing stiff competition: Apple (NASDAQ: AAPL  ) recently ramped up its iPhone marketing and distribution efforts in the country. Right now, both companies have about 5% smartphone market share in India -- a percentage both companies, and their investors, want to grow.

A bitter Apple
Apple began selling the iPhone in India about four years ago, but the iPhone isn't exactly a smartphone for the masses. It's premium pricing doesn't lend itself well to markets where prepaid, no-contract phones dominate -- like in India. A recent Reuters article pointed out that the price of a new iPhone 5 is the same as two months' salary for an entry-level software engineer in India. The iPhone's high price point is one of the reasons the company is sitting near the bottom of India's smartphone market share.

Source: Reuters.

To fix this, Apple set up installment plans for iPhones, and recently added two new distributors for the phones. With these two changes, a major retail chain in India that sells 15% of all iPhones in the country saw sales triple this past December to January. But so far, the company is still struggling to wrestle more market share away from Samsung and other competitors.

BlackBerry's (less than) triumphant return
BlackBerry is slightly ahead of Apple in Indian smartphone market share, taking the No. 5 spot in India ahead of Apple's No. 6. But up until last year, BlackBerry had about 10% of the market, so the company is fighting to gain back old ground, not expand into new territory.

With the launch of the Z10 in India this week, BlackBerry is going to face a similar pitfall that Apple faced several years ago. About 95% of cell phone users in India have no-contract, pre-paid plans and carriers in the country don't subsidize phones. The Z10, unsubsidized, comes in at a staggering $800. That's an expensive phone by any country's standard. BlackBerry is working to set up installment plans like Apple's, but it's questionable that the company could earn significant market share in the country with such an expensive phone.

The Z10 is launching in 2,000 retail locations in 50 cities, but that won't matter much if consumers in India can't afford it. The Z10's debut in India comes just as two analyst firms cut the phone's sales estimates for Canada and the U.K. BlackBerry can't afford the Z10 not to sell in markets like India, because emerging markets are where the company has the strongest growth in sales volume. 

The long haul
Both companies know how important India is to the future of mobile, but as it stands right now, neither one has introduced what Indian consumers really need: a cheaper phone. Rumors of a low-cost iPhone have resurfaced recently, but Apple is mum about any possibly plans.

Investors need to see Apple and BlackBerry introduce low-cost smartphones in India, and other emerging markets. While Apple may have seen a spike in sales from installment plans, it's uncertain how long that angle will play out. With Samsung and local players eating up an overwhelming percentage of India's smartphones, it's obvious that cheaper phones are what Indian consumers want. If Apple does come out with a cheaper iPhone, and BlackBerry doesn't follow suit, it's easy to imagine Apple grabbing much more of India's smartphone market share.

With BlackBerry betting everything it has on its new OS, it needs the Z10 to sell in every market, including India. Apple is far less desperate to see sales grow quickly in the country, but an increase in iPhone sales there would be a bit of good news for the company. Apple has dominated the U.S. mobile market, but some investors are beginning to wonder whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Read/Post Comments (3) | Recommend This Article (0)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 26, 2013, at 6:11 PM, WilsoniaGoldens wrote:

    Actually it has been reported that Blackberries share prior to the Z10 launch was only 2% so if it is now 5% that is a positive for Blackberry. There is also four more BB lower end devices slated for launch later this summer which should help make the shaare for BB to go even higher.

  • Report this Comment On February 26, 2013, at 6:28 PM, NotAfoolHere wrote:

    "Even though RIM is launching its BlackBerry 10 operating system on January 10, it is not giving up developing its older BlackBerry 7 platform. According to CEO Thorsten Heins, RIM continues to have a significant R&D team working on the platform that continues to work on it. Unlike Nokia, which stopped working on its Symbian and MeeGo platforms altogether to focus on Windows Phone, RIM believes BlackBerry 7 still has an important role to play for the company, especially in the low-cost segment in Asia Pacific markets.

    “There is a strong success with BB7 devices in the Asia Pac markets. And as you can see on the devices that we’re launching with BB10, you can probably get an idea of in which price points they fit. So no, we will support those on-boarding, entry-level smartphone markets. We will continue to support them with BlackBerry 7, and you might expect us to even build one of the other new products based on BlackBerry 7,” Heins said during the company’s third quarter earnings call.

    Heins even mentioned that RIM had all the tools and teams necessary to license BlackBerry 10 to another company, if someone approaches them and they are open to licensing the platform. However, they first need to prove the capabilities of BlackBerry 10, which the company will do on January 30."

  • Report this Comment On February 27, 2013, at 3:42 PM, CZZZZZZ wrote:

    BB7 devices are rocking the 3rd world, apple has nothing to compete with those entry level smartphones, they are inexpensive and easy to get off contract. BB7 will be around for a couple more years yet, Indosnesia is another prime example of smartphone hungry but cash poor consumers who love BB7...these customers aren't interested in 15000 solitaire apps on a $800 phone....unlike many in the western world.

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