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Apple's India Woes Continue, Samsung to Ramp Up Production
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Apple Inc (AAPL - Free Report) and Samsung Electronics have been dominating the global smartphone market for quite some time now. However, as growth slows down in developing markets; both the companies have shown keen interest in strengthening their footprint in emerging markets like India.
Samsung has been one of the dominant names in the lucrative Indian smartphone market. However, intensifying competition from Chinese manufacturers like Oppo and Vivo and problem with the Galaxy 7 hurt its market share.
Moreover, Apple’s plan to start iPhone assembling operations in India also intensified competition, particularly in terms of pricing. However, Samsung is now gearing up to face this challenge by doubling its production capacity at its main Indian manufacturing facility.
The Korean giant recently stated that it will be expanding the factory located near New Delhi by another 35 acres and will invest over $764 million over the next three years. We believe that Samsung’s aggressive investment doesn’t bode well for Apple in the long haul.
Why Apple & Samsung are Keen on India?
India is predicted to become the second largest smartphone market in the world. Per media reports, in the first quarter of 2017, smartphone penetration in India was 16% compared with 3% growth globally.
India presents an attractive growth opportunity for the companies over the long run, given its younger population and increasing investment in 4G network infrastructure (launch of Reliance Jio has given the much needed impetus). Also, with Narendra Modi at the helm, the tagline of “Make in India” is fast catching up with global manufacturing giants.
Since last year, Apple has been increasing its focus on India to claim a greater share of the vast smartphone market, of which it reportedly holds only 2% currently. The company faces slowing iPhone demand in most of the regions, either because of competition, regulatory hurdles (as in the case of China) or market saturation (as in the U.S).
Moreover, pricing has been a headwind for Apple in India. The market in India is highly cost sensitive. Reportedly, the majority of the smartphones sold in the region are priced around INR 10K (roughly $145). Apple’s flagship iPhone 7, on the other hand, costs almost five times more. Even iPhone SE is priced at INR 30K.
The lion's share of Apple’s revenues in the country comes from devices that are a couple of generations old. Newer models have relatively low demand given the hefty price tag. Moreover, Apple’s lack of focus on regional customers’ demand is a concern. India is categorized by handsets that work on dual SIMs. Apparently, Apple is not keen on making dual SIM handsets. This could be a very big impediment to growth in the country.
Samsung Dominates Indian Market
Samsung and a few Chinese companies dominate the Indian smartphone market. With reportedly 26% share, Samsung is a leading player in the country. Apple is already quite late to the party.
Per Financial Express, which has cited a Counterpoint Research report, Samsung emerged as the top premium smartphone brand in the country, replacing Apple. In the first quarter of 2017, Samsung’s share of the premium smartphone market was 48% compared with 43% held by Apple.
In the fourth quarter of 2016, the Galaxy Note 7 fiasco cost Samsung a lot, relegating it to second spot while Apple took the first. In the first quarter of 2017, Samsung held 26% of the overall Indian mobile handsets market, which grew 6% year over year, adds the report further.
The report further adds that Chinese brands like Xiaomi, Oppo and Vivo have also started to gain ground in the said market.
Despite the pros and cons, Apple is expected to continue its India drive. It will be taking up a lot more initiatives this year. However, whether those initiatives yield desirable results remains to be seen.
Apple, of course, is not the only tech player eyeing India for growth. Given the potential of this market, Silicon Valley’s interest is well understood. From Microsoft Corp. (MSFT - Free Report) and Alphabet to Facebook Inc. , all remain keenly focused on the market.
Over the past one year, shares of Apple have registered growth of 57.02% compared with the Zacks Computer Mini industry’s gain of 55.25%.
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Apple's India Woes Continue, Samsung to Ramp Up Production
Apple Inc (AAPL - Free Report) and Samsung Electronics have been dominating the global smartphone market for quite some time now. However, as growth slows down in developing markets; both the companies have shown keen interest in strengthening their footprint in emerging markets like India.
Samsung has been one of the dominant names in the lucrative Indian smartphone market. However, intensifying competition from Chinese manufacturers like Oppo and Vivo and problem with the Galaxy 7 hurt its market share.
Moreover, Apple’s plan to start iPhone assembling operations in India also intensified competition, particularly in terms of pricing. However, Samsung is now gearing up to face this challenge by doubling its production capacity at its main Indian manufacturing facility.
The Korean giant recently stated that it will be expanding the factory located near New Delhi by another 35 acres and will invest over $764 million over the next three years. We believe that Samsung’s aggressive investment doesn’t bode well for Apple in the long haul.
Why Apple & Samsung are Keen on India?
India is predicted to become the second largest smartphone market in the world. Per media reports, in the first quarter of 2017, smartphone penetration in India was 16% compared with 3% growth globally.
Apple Inc. Price
Apple Inc. Price | Apple Inc. Quote
India presents an attractive growth opportunity for the companies over the long run, given its younger population and increasing investment in 4G network infrastructure (launch of Reliance Jio has given the much needed impetus). Also, with Narendra Modi at the helm, the tagline of “Make in India” is fast catching up with global manufacturing giants.
Since last year, Apple has been increasing its focus on India to claim a greater share of the vast smartphone market, of which it reportedly holds only 2% currently. The company faces slowing iPhone demand in most of the regions, either because of competition, regulatory hurdles (as in the case of China) or market saturation (as in the U.S).
Moreover, pricing has been a headwind for Apple in India. The market in India is highly cost sensitive. Reportedly, the majority of the smartphones sold in the region are priced around INR 10K (roughly $145). Apple’s flagship iPhone 7, on the other hand, costs almost five times more. Even iPhone SE is priced at INR 30K.
The lion's share of Apple’s revenues in the country comes from devices that are a couple of generations old. Newer models have relatively low demand given the hefty price tag. Moreover, Apple’s lack of focus on regional customers’ demand is a concern. India is categorized by handsets that work on dual SIMs. Apparently, Apple is not keen on making dual SIM handsets. This could be a very big impediment to growth in the country.
Samsung Dominates Indian Market
Samsung and a few Chinese companies dominate the Indian smartphone market. With reportedly 26% share, Samsung is a leading player in the country. Apple is already quite late to the party.
Per Financial Express, which has cited a Counterpoint Research report, Samsung emerged as the top premium smartphone brand in the country, replacing Apple. In the first quarter of 2017, Samsung’s share of the premium smartphone market was 48% compared with 43% held by Apple.
In the fourth quarter of 2016, the Galaxy Note 7 fiasco cost Samsung a lot, relegating it to second spot while Apple took the first. In the first quarter of 2017, Samsung held 26% of the overall Indian mobile handsets market, which grew 6% year over year, adds the report further.
The report further adds that Chinese brands like Xiaomi, Oppo and Vivo have also started to gain ground in the said market.
Despite the pros and cons, Apple is expected to continue its India drive. It will be taking up a lot more initiatives this year. However, whether those initiatives yield desirable results remains to be seen.
Apple, of course, is not the only tech player eyeing India for growth. Given the potential of this market, Silicon Valley’s interest is well understood. From Microsoft Corp. (MSFT - Free Report) and Alphabet to Facebook Inc. , all remain keenly focused on the market.
Zacks Rank & Share Price Movement
At present, Apple has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past one year, shares of Apple have registered growth of 57.02% compared with the Zacks Computer Mini industry’s gain of 55.25%.
3 Top Picks to Ride the Hottest Tech Trend
Zacks just released a Special Report to guide you through a space that has already begun to transform our entire economy...
Last year, it was generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. Download Report with 3 Top Tech Stocks >>