Although it is the most coveted smartphone in the business, the iPhone fails to impress in the Indian market. This, despite Apple’s Inc. (NASDAQ:AAPL) big push to gain more ground in the local market last year. According to Strategy Analytics, the iPhone sold around 35% fewer iPhone in India during the second quarter of 2016 than it had during the same period last year. The market research firm also reported that only 800,000 iPhones were sold in India in April, May and June, a measly figure compared to the 1.2 million units sold in the same months of 2015.
Apple’s iOS is quickly losing ground; its market share is down to 2.4% from an already tiny 4.5% a year earlier. On the other hand, Google’s Android is dominating the entire Indian market. During the second quarter of 2016, Android OS accounted for 97% of the smartphone market, up from 90% during the same period last year.
In order to go head to head with Alphabet Inc’s (NASDAQ:GOOGL) Android, Apple has no other choice but to reduce the pricing to “cheaper levels” according to Woody Oh, director at Strategy Analytics.
Analysts noted that one of the reasons for Apple’s bleak sales is unaffordability. The iPhone maker is struggling to sell premium handsets in a country where most users prefer cheaper, more readily available smartphones that are priced under $150. Unfortunately, Apple’s cheapest iPhone is priced at $493 or Rs 39,000, which is more expensive than the average smartphone price in the country.
Although Apple has specific distribution and retail outlets all over India, the company does not sell its products online. A third of all handset sales in India were conducted online.
“Indian carriers don’t tend to provide subsidies either,” Linda Sui, Strategy Analytic’s director for wireless smartphone strategies, said in an interview. “Consumers have to pay the full cost of an iPhone upfront.”
While Apple had plans to sell refurbished iPhones in India as a way to make the handset more affordable, the government has rejected the idea of selling used phones in the country.
“We are not in favour of any company selling used phones in the [country], however certified they may be,” India’s commerce and industry minister Nirmala Sitharaman said.
The rejection might’ve been a big blow to Apple but all is not lost. The Indian finance ministry said that in order to set up more Apple stores in the country, Apple would have to sell at least 30% locally-sourced goods. Sitharaman is currently in talks with the finance ministry to reconsider exempting Apple from the local sourcing rules.
The announcement was made after Cook traveled to India as Apple’s CEO. During his four-day trip, Cook met with different telecom executives. He also met with India Prime Minister Narendra Modi. Cook also visited Apple’s development center in Benguluru to announce a new iOS design as well as the company’s Maps development center in Hyderabad.
Apple stock is up 0.25% to $107.75 on Monday. Shares of the $588 billion market cap company have advanced 12.64% in the last 4 weeks and 16.55% in the past three months. Over the past 5 trading sessions the stock has gained 3.70%. From a technical perspective, AAPL remains in the green since dip buyers stepped in at $100 on July 27. The next short term areas of interest from current levels are at $108.57 followed by the $109.31 and $110 zones, respectively.
The Cupertino, California-based technology giant has a median Street price target of $120.00 with a high target of $185.00.
Apple is down 4.65% year-over-year, compared with a 2.85% gain in the S&P 500.