Apple Inc. to Bolster Retail Presence in a Market Growing by Triple Digits

As one of the largest smartphone markets in the world and boasting impressive triple-digit growth, India is a great opportunity for Apple (NASDAQ: AAPL  ) . And Apple has a plan to capitalize on it.

"Apple plans to go local with a vengeance," said The Economic Times from its Kolkata and Mumbai offices.

Apple to sell lower-cost, older devices
Apple's newest models are simply too expensive to gain any traction in India. The global average selling price, or ASP, for Apple iPhones was about $650 in 2013, according to IDC. That's a considerable premium compared to the typical smartphone. "IDC data shows 66% of Android's 81% [third-quarter] smartphone share [of global shipments] are junk phones selling for $215," AppleInsider's Daniel Eran Dilger stated politely in November 2013.

Fortunately, selling premium phones means that even older iPhones that have worked their way down Apple's cost curves can sell successfully in markets like India. This is Apple's plan, exactly.

"Apple wants to focus more on its entry-level models in these stores such as iPhone 4, iPhone 4s, iPad mini and iPad 2, which are essentially in the sub- 30,000 [rupees (or about $490 dollars)] segment and also its largest-selling products in India," a senior executive of a leading Apple trade partner in India told The Economic Times.

iPad 2. Image source: Apple

The news follows another report last month from The Economic Times that Apple had planned to reinitiate iPhone 4 production to sell the iPhone in emerging markets India, Indonesia, and Brazil.

Too hot to ignore
Apple had experimented with offering more affordable pricing on the iPhone 4 in emerging markets in 2013. In the company's fiscal 2013 third-quarter earnings call Apple said the iPhone 4 push helped iPhone sales grow 400%, year over year, during the quarter -- far higher growth than any other country mentioned in the earnings call. In Apple's fiscal 2013 fourth-quarter earnings call Apple CFO Peter Oppenheimer expressed again that Apple was pleased with "unit sales up sharply year-over-year" in India.

Beyond selling older, lower-cost devices to attract customers, Apple plans to pursue a more aggressive retail strategy in the country. It plans to set up smaller 400 to 600 square foot exclusive locations in big cities and tier II markets with local resell partners, according to The Economic Times.

"Apple wants to set up these smaller stores in areas where people have high disposable incomes, there's a strong penetration of smartphones and a large student population such as Pune, Vizag, Guwahati, Durgapur and Gangtok," said The Economic Times' Writankar Mukherjee and Sagar Malviya.

Bolstering its presence in such a hot emerging market could help Apple expand its customer base. Considering the stickiness of Apple's ecosystem, building an Apple-branded retail presence in India could pay off for the company over the long haul. Products like the iPad 2, iPad mini, and the iPhone 4 could serve as a gateway product into the Apple ecosystem.

More compelling ideas from The Motley Fool
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.


Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

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 March 13, 2014, at 11:42 AM, Cintos wrote:

    As an Apple shareholder, I would caution Apple regarding involvement in India. Indian government requirements for locally-manufactured content might easily be addressed by setting up manufacturing facilities in the county. Big BUT. Using Union Carbide as an sad example, India will mandate that a foreign company will bear all the weight of criminal responsibility even though they will limit foreign managerial oversight.

Add your comment.

DocumentId: 2873612, ~/Articles/ArticleHandler.aspx, 7/28/2014 5:35:19 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement