GOOGLE TO ALSO REPEAT APPLE’S MISTAKE IN INDIA

The article’s Hindi version appeared on iChowk.

Google has launched its much talked about range of Pixel smartphones. Pixel smartphones will be available in two sizes – Pixel and Pixel XL. The phones are open for pre-order booking in US, UK, Germany, Canada and Australia. Other markets will follow. In India, Pixel will be available for pre-order on October 13.

Pixel is the first serious challenge for Apple from Google in the smartphone hardware, the segment that has made Apple the most valuable company globally. Two-third of Apple’s profit comes from iPhone. Pixel has been designed and produced by Google and Google is publicizing it with ‘Made By Google’ tag (there is a website as well – https://madeby.google.com/intl/en_in/phone/) while Google’s earlier trysts with smartphone hardware, i.e., Motorola’s acquisition and Nexus outsourcing, were basically experimental platforms to fine-tune its operating system Android, now the world’s most used OS. They were never in race with iPhone for any slot.

pixel-madebygoogle

But now Google is going to repeat the same mistake which Apple has done.

iPhone is globally the most profitable phone brand and Apple is in Indian market for a long time now yet sale of Apple products including iPhone and Apple revenue in India is still 1% of its global performance.

The reason is its elitist (read absurd) pricing which is totally out of place in a price-sensitive market like India. The most premium and high-end smartphones in India are available in the range of Rs. 50,000-60,000 but if we see the overall picture, Rs. 10,000-30,000 is the most in-demand range for smartphones here whereas iPhone’s range for its latest offering (iPhone7) starts at Rs. 60,000 and goes upto Rs. 92,000.

This is in a country where the per capita income in 2015-16 was still Rs. 7774.

Now that Apple is seeing decline in iPhone sales in its growth driver China and stagnation in its other developed markets like US, UK or Europe, it needs a market like India, the world’s second biggest smartphone market. But Apple can never succeed in India at this price-range. Apple still wants to maintain iPhone’s ‘super-pricey’ tag in the Indian market. While that can sustain iPhone’s image of being a luxury brand, it will never allow Apple to become a big market player here.

And now Google is going to adopt the similar branding mantra.

Google Pixel starts at Rs. 57,000 in India and goes up to Rs. 76,000. We can only expect that Google Pixel will become another iPhone at this unjustifiably high price-range in India although cracking the Indian market is more imperative for Google than Apple.

Except India, Apple’s iPhone is the biggest brand in US, China and every other big market and earns maximum profit even if its market-share on unit shipments may not be the largest one in many markets. So, Apple commands a premium return. Now, Google will have to face Apple and other established brands including Samsung, the largest selling cellphone brand globally, in these markets. As Apple has a nearly non-existent presence in India, the country can be the big opportunity for Google to start on a solid base that it needs to take on Apple globally. And Google’s strong brand perception can come handy here.

Google is among the most valuable and strong brands. We can gauge its brand prowess by the fact that internet search has become synonymous with the term ‘google or googling’ and we should not be surprised if the term gets dictionary space in future. Its OS Android has 97% market-share in India – an absolute domination that tells us that almost every smartphone in India uses Android as its OS. So Google has already this software ecosystem advantage in the Indian market but given the price-range that it has chosen for its Pixel range of phones, it is never going to succeed on the hardware front. It is never going to get those volumes that any new business venture needs.

According to a report by Counterpoint Research, India has 220 million smartphone users and the Indian smartphone market has become the world’s second largest leaving behind the US market. But if we see the population penetration here, it is still at around 20% of the overall mobile subscription base in the country that is at 1.1 billion. From feature phones to smartphones – with a faster growth rate – that presents a huge opportunity.

Since India is the fastest growing smartphone market with 17% growth rate that is projected to increase further and its overall mobile subscription base is projected to reach at 1.4 billion by 2021 and as Indians are expected to buy around 150 million smartphones this year, Apple or Google or any other company can ignore the Indian market at its own peril. If Samsung and other companies have been able to crack the Indian market, it is because they have kept its price sensitivity on top of their marketing strategy – launching models and variants at every price point.

©SantoshChaubey

APPLE’S PARCHED ORCHARD IN INDIA

Does Apple’s presence and the subsequent marketing strategy make any sense in India?

No!

Few months ago, when Apple CEO Tim Cook was in India, he stressed that Apple is betting big on India and is preparing for the day when India would become the next China of the smartphone revolution. He said that India is at same juncture in telecom revolution where China was some 7 to 10 years ago.

Yes, India is going to be the next big thing in telecom after America and China. It has already replaced America as the market having second largest smartphone user base. And since it has immense untapped potential, it is going to be the darling of whole world, including companies from America and China – either for hardware or software.

India’s smartphone user base is at 220 million while the number of mobile subscriptions in the country has reached to 1.1 billion is expected to scale up to 1.4 billion by 2021. Going by the base 220 million smartphone users, the smartphone penetration in India is still at 20% of the overall mobile phone subscription.

So, that is huge..huge opportunity.

Smartphone shipments to India grew at over 20% the last year. This year, India is expected to buy around 150 million smartphones. According to some estimates, the smartphone bases is projected to cross 700 million mark by 2020. It may be even faster than that as technological advancements are on the verge of making Indian telecom a data driven market. Smartphone prices are rapidly coming down, especially of 4G and LTE enabled devices. And as the Indian government is betting big on smartphones to drive its digital governance plan, it is just waiting to happen.

Now if Tim Cook sees India market where Chinese telecom sector was some 7 to 10 years ago, that would be, but India may bridge this gap much sooner than he would have calculated. It may be by 2019 or 2020.

Since Apple went on to increase falling prices of its iphone 6, 6S and 5S to further beef up its luxury brand perception and has launched iPhone 7 at the same price points, from Rs. 60,000 to Rs. 92,000, it seems Apple and Tim Cook have miscalculated the time when India would be finally ready to take off, as was the case with China.

Indian smartphone market has already taken off. Most of the new and replacement mobile phones are going to be smartphones as data prices have come crushingly low with the entry of a new operator, Reliance Jio, that has announced to charge only for data (and not for voice).

To continue..

©SantoshChaubey 

WHY HAD TIM COOK COME TO INDIA?

We cannot take that something drove Tim Cook and he took an Indian sojourn just for that.

We cannot say but he is certainly not in the kind of circumstances (and his Indian itinerary suggests this as well), that he would be forced (by his inner call) to look for spiritual solace of Orientalism – like his company’s defining soul, Steve Jobs, had done.

We also cannot say, again based on his entourage, his itinerary and his engagements that he was here, in this country, for a planned or random tourism trip.

But then, how can we take on the face value, the implicit and explicit contours of his long India visit, spread over four days – for the specific purpose of promoting Apple’s business interests in India – given the facts that the sum total of the purpose of his visit was restricted to emphasizing on those very measures which have pushed Apple to the periphery of India’s tech market – including the blockbuster segment of smartphones?

If Apple has just around 2 per cent market segment in India’s smartphone market, projected to be second largest soon (globally), it is Apple’s own doing – with a blind race to establish iPhone as a super-premium model.

And the way Apple decided to do it – was reflective of how it treated India.

First, it would create a false impression of exclusivity by keeping a large market like India in the last rounds of iPhone launch.

Then, it would price iPhone astronomically high, making it, again, an exclusive possession of the very few, even if it was available on lower price points in other markets.

And above all, it tried to dump its old models in India – as if Indians were not able to afford its latest launches. It always sent the message that Apple considered India a market only for its obsolete models – or a market for refurbished iPhones.

When every other company, including Samsung and the Chinese vendors, see India as a market with immense potential and make it a point to announce global launches simultaneously in India. They even launch specific models for the Indian market.

By the time Apple realized where it erred, it had become too late. This long visit by Tim Cook, after the first ever dip in iPhone sales, shows that. Because it came too late.

Or Apple has really realized where it erred?

It doesn’t seem so.

Especially after the indications that we are getting after Tim Cook’s high-flying socializing and strategising stopovers in India.

Reports say the main focus of Tim Cook’s India visit was convincing the Indian government about its refurbished iPhone business and setting up Apple stores without the mandatory 30 per cent local sourcing clause.

These are again shabby and ‘poor in taste’ elements and emphasize Apple’s superiority complex (if I take the liberty to use the term) – the very elements that have pushed Apple to a marketing oblivion in India.

And, if this was really the intent of Tim Cook’s India vision, then it was so poorly thought. While others companies tried to own the Indian market in order to win it, the basic of any marketing strategy, Apple disowned the Indian customer – as if he never figured in the their scheme of things.

But if it was not so – then the million dollar question is – why Tim Cook made this India visit?

©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/