BANGALORE: India - After deliberating for
months, Abhilash Sathyendra, a 25-year-old equity adviser in Mysore,
India, bought his first Apple phone. He paid 9,000 rupees, or $150,
upfront for a black iPhone 4s and swiped his credit card for the
remainder, six no-interest monthly payments of $62.50.
"I've
used Android phones forever, but the iPhone is hardier and makes a
social statement," said Sathyendra, whose new phone has become a
conversation opener with clients. "I think I look, not wow, but cool and
corporate," he said.
Indians use the monthly
payments, called equated monthly installments, to buy a variety of
products and services, like branded jeans and cosmetic dental
treatments. That Apple used this method too clinched it for him. "EMIs
make the iPhone affordable to Indians like me," said Sathyendra, who
takes home a salary of $400 a month.
In 2013,
Apple wakened to the potential of the world's fastest-growing smartphone
market. India also happens to be the second-largest mobile market, with
800 million active users. "Apple sees that the market is at a takeoff
point. Sales numbers could get serious within a year or two," said
Anshul Gupta, a Mumbai-based principal analyst for mobile devices at the
research firm Gartner. Apple's shipments have doubled from 2012 and
will surpass 1 million phones in 2013, Gupta said.
In
a price-sensitive country where multinational corporations sell bottles
of soda for 16 cents, pizzas for 75 cents and burger meals for $1.40,
basic cellphones have dominated the landscape. Smartphone penetration is
less than 20 percent of the phone-using public. But a combination of
falling prices, fast 3G speeds and a thriving app ecosystem is fueling
the adoption at ripping speeds.
Shipments more
than doubled, to 41.4 million, last year, according to IDC, a market
research firm. The smartphone market grew 229 percent year-on-year in
the third quarter of 2013, and IDC projects shipments will exceed 129
million by 2015.
With that kind of energy, this
is a market where Apple can no longer afford to be a fringe player,
selling to an elite few and losing out to pushy rivals. It is also a
market where 80 percent of smartphones sell in the range of $70 to $200,
said Gupta, the Gartner analyst. High prices have kept Apple at the
tail of the top 10 brands by sales, way behind No. 1 Samsung, which
sells more than three-quarters of its phones for less than $400, and No.
2 Micromax of India, whose most expensive phone is $350. The cheapest
iPhone costs about $525 in India.
To draw young
buyers and increase its volume and market share, Apple, based in
Cupertino, Calif., offered a number of enticements besides the payment
plan. Full front-page newspaper ads and TV commercials in recent months
offered bonuses for trading in certain old phones and multiple deals,
but with a single carrier so far. Wary of the inevitable
branding-versus-pricing dilemma, Apple carefully couched these offers to
not look like discounts.
"Apple has shown
great agility in their India strategy all through 2013," said Manasi
Yadav, a Bangalore-based senior mobile industry analyst with IDC India.
Making
the phones cheaper, without appearing to be cheap, is enticing a new
category of young, brand-conscious Indians, like Chaithra Nayak, to
switch to the more expensive iPhones. Nayak, 24, who studies in the
bustling coastal city of Mangalore, took six months to persuade her
parents to get her an iPhone. Her father, a businessman, eventually
buckled when she told him she could trade in her old Sony smartphone for
a discount of Rs 13,000, or $216, on the iPhone 5c, which costs Rs
41,900, or $698.
"When I use my blue-colored iPhone, I draw attention," Nayak said.
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