Flurry of Of­fers

The Economic Times - - Com­pa­nies: Pur­suit Of Profit -

As a re­sult, the tar­get of sell­ing 3 mil­lion iPhones this fis­cal year, set by Ap­ple CEO Tim Cook dur­ing his In­dia visit in May 2016, is un­likely to be achieved, they said.

Ac­cord­ing to es­ti­mates by mar­ket ex­perts, Ap­ple, based in Cu­per­tino, Cal­i­for­nia, shipped in 800,000 to 900,000 iPhones to In­dia in the Oc­to­ber-De­cem­ber quar­ter. Smart­phone sales have fallen 30-35% since de­mon­eti­sa­tion, pulling down Ap­ple’s growth rate by 50%, re­tail­ers said.

“There is huge pres­sure on driv­ing sales num­bers, which is why there has been a ne­ver­be­fore-seen flurry to launch con­sumer of­fers to push iPhone sales — be it bundling, cash­back or buy­back. How­ever, this has pushed up the cost of sell­ing, im­pact­ing the profit mar­gin,” said one of the ex­ec­u­tives.

The sales drop adds ur­gency to Ap­ple’s plans to start mak­ing iPhones in In­dia and of­fer them through its own stores, apart from sell­ing re­fur­bished de­vices, in a bid to boost rev­enue from the coun­try. Ap­ple de­clined to com­ment on the de­vel­op­ments. The govern­ment scrapped high-de­nom­i­na­tion cur­rency notes in Novem­ber to com­bat un­ac­counted money. It also im­posed curbs on cash with­drawals from banks and ATMs as it in­tro­duced new cur­rency notes, forc­ing peo­ple to curb spend­ing.

The chief of a lead­ing mo­bile phone re­tail chain said iPhone sales have been pri­mar­ily cash-driven pur­chases, most of­ten bought with un­ac­counted money.

“Even af­ter the govern­ment eases up the cash with­drawal limit in March, it will take a few more months for the sit­u­a­tion to be back to pre-de­mon­eti­sa­tion days. And then Sam­sung’s next flag­ship will be launched, which will fur­ther im­pact iPhone sales,” he said.

Ap­ple posted record rev­enue in In­dia in the Oc­to­ber-De­cem­ber quar­ter, al­though de­mon­eti­sa­tion is “still def­i­nitely hav­ing some over­hang”, Cook said dur­ing an earn­ings call this month.

ET had ear­lier re­ported record sales of iPhone 7 and 7Plus in Oc­to­ber due to the nov­elty fac­tor, ab­sence of ri­val Sam­sung’s Galaxy Note 7 and a brief pe­riod of record sales im­me­di­ately af­ter de­mon­eti­sa­tion in Novem­ber when con­sumers rushed to buy iPhones to use up their old cur­rency notes.

Ap­ple posted sales of ₹ 9,997 crore ($1.5 bil­lion) in the fis­cal year to March 2016, grow­ing 54% from the year be­fore. About 75% of Ap­ple’s rev­enue is gen­er­ated from iPhone sales, of which al­most 45% comes in the Oc­to­ber-De­cem­ber quar­ter due to the launch of new hand­sets and the fes­tive sea­son shop­ping.


One ex­ec­u­tive said Ap­ple’s fo­cus on man­u­fac­tur­ing in In­dia is to push rev­enue in the coun­try since the com­pany’s lofty plans haven’t been ful­filled. Ap­ple In­dia launched an am­bi­tious ‘Project Ever­est’ in 201314 to sell 10 mil­lion iPhones in In­dia by 2016-2017, which re­mains a far cry. This project, de­vel­oped with Bos­ton Con­sult­ing Group, was aimed at ex­pand­ing dis­tri­bu­tion to reach the 10 mil­lion sales fig­ure.

“Ap­ple has re­alised that if it has to grow in In­dia like in China, it would re­quire both re­fur­bished hand­sets since it can price them ag­gres­sively with com­pany war­ranty terms, and also its own Ap­ple Stores to re­de­fine the en­tire sell­ing and brand ex­pe­ri­ence. Hence, by set­ting up lo­cal man­u­fac­tur­ing, it will be able to start Ap­ple re­tail and also ex­pects the govern­ment to then be­come sen­si­tive to its re­fur­bished hand­set sell­ing plans,” said one ex­ec­u­tive. The govern­ment has not al­lowed Ap­ple to sell re­fur­bished hand­sets on con­cerns of ewaste and its im­pact on the ‘Make in In­dia’ pro­gramme.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.