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Having an ambitious target to sell 80 mn iPhones by the end of 2012, Apple, the makers of iPhone, is changing its sales and marketing strategy in several countries including India. Apple, so far, available in eighty-five countries has sold around 30 mn handsets across the globe. Of them, as per industry estimates, around 55,000 handsets are sold legally in India by two operators-Bharti Airtel and Vodafone. However, the actual figures could be larger than this, as a large number of people got hold on these devices through gray channels.

Apple is said to be in talks with some of the national distributors in India to sell unbundled iPhone. India would not be the first country where iPhone will tie up with an independent carrier. The company has tied-up with Carphone Warehouse in the UK, a move similar to many other countries.

"The company is in talks with some of the national distributors in India. However, it will take another two to three months time till you see Apple's iPhone in an multi-branded retail outlet near your home," says an official close to the development. He preferred anonymity as he was not entitled to talk to media.

If all goes well, then iPhone, which is only available with Bharti Airtel and Vodafone stores, would soon be available in other multi-branded phone outlets in India. Apple has held several rounds of talk with a few channel distribution leaders in India. However, the talks did not bore fruitful results. Apple is yet to take a final call.

It may be recalled that India was one of the few countries, where on the same day touchscreen phone was launched with two telecom operators. In most of the countries, iPhone has tied up with one operator only. The move will increase the penetration and visibility of iPhone in the country. So far the phone is available in around 300 Bharti Airtel and 250 Vodafone stores only. Besides, it is also sold in eleven iStores in India.

Further, one will also have the opportunity to choose their own operator when the phones will be available.

However, when contacted, Apple spokesperson declined to comment on the issue.

The Domestic Market
In India, Apple's decision to tie up with Bharti Airtel and Vodafone, to sell iPhone, did not bore much fruit. Both the carriers did not provide any subsidy on the phone, unlike the US market, where the carrier AT&T heavily subsidized iPhone, to make it affordable to the end customer. As the phone was too expensive in India people did not show much enthusiasm. Further, both the operators specialize in selling low-end phones, that too with MBO outlets. They have not created any push for the product, as well, except in the launch of the product.

Indian buying habits are also different. They prefer buying a handset from a MBO, that too unbundled handsets, rather than going to an operator store. Bundling of services never worked in India. Even RIM, the makers of BlackBerry have realized it. Despite being available with eight operators in India, they have tied-up with a third party carrier. RIM has tied-up with Redignton in the beginning of 2009 to sell unbundled BlackBerry handsets, which is giving them good results.

"I believe it is a good move from Apple. It has come out with good schemes in the past, like making iPhone available on EMIs, which worked for the company as well," says Vijay Menon, CEO, Mobile Next. He points out that Apple's decision of partnering with Bharti Airtel and Vodafone did not bear much fruits for the maker of touchscreen smartphones. "Operators have limited reach, if you compare with the number of MBOs that the country has," he quickly points out.

As per industry estimates, India has roughly 2 lakh multi-branded outlets, small and big, which sell mobile handsets. The move will bring the product more into focus, as operator channels do not push the sales. However, the success of the move is still debatable. Price and competition are the foremost challenges.

"When Apple had launched iPhone in India, the prices were very high and that was the reason it did not perform well in the price sensitive country like ours. Now they have a huge competition in the segment as well, who are offering application targeted, especially at Indian people with competitive price range. Apple has to consider these two facts in order to reap the benefits," says Sanjeev Mahajan, CEO, HotSpot.

The Global Picture
Globally, Apple has turned aggressive recently in terms of selling iPhones. Apple's expansion into a large number of countries with aggressive sales and marketing strategy in the past year has produced a clear effect on sales volumes with the recent price adjustments on the 8GB 3G iPhone. As per Gartner, Apple sold 5.4 mn units iPhone in the second quarter of 2009, which indicates a 51% growth in shipments. It helped Apple to maintain the #3 position in the smartphones market, where it has stayed since the third quarter of 2008. As per Gartner, iPhone market share in the smartphone category stood at 13% by the end of Q2 of FY 2009-10.

Smartphone sales were strong during the second quarter of 2009, with sales of 40.9 mn units in line with Gartner's forecast of 27% year-on-year sales growth for 2009. Given the higher margins, smartphones offer the biggest opportunity for manufacturers. It is the fastest-growing market segment and the most resistant to declining ASPs.

The phone is so far available in eighty-five countries only. It is expected to be launched in four new countries, including Equatorial Guinea, Guinea Bissau, Qatar, and Thailand.

Apple brought its much-anticipated new device-the iPhone 3G S-to the market at the end of the second quarter of 2009, but its full potential will only start to show in the sales figures in the second half of 2009.

Akhilesh Shukla
akhileshs@cybermedia.co.in