Why Apple’s India Strategy is A Winner

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iphone4

Don’t look now, but here comes India.

While everyone obsessed yesterday over Apple finally launching on the world’s largest carrier, China Mobile — and the Chinese market in general — smart companies are starting to focus on the smartphone market of the future: India.

The country’s 1.2 plus billion people are kinda hard to ignore. Also: India is so much more than the “other China” when you dig into the details of that smartphone market. Everything about India is an opportunity for smartphone companies and providers of mobile anything. And the major companies are each taking radically different approaches.

I think Apple’s strategy is the best one, and I’ll tell you why. 

Compared with China, India is a much bigger opportunity in so many ways. A lot more people there will be getting their first mobile phone this year, and that’s an opportunity. India has a massive English-speaking population, and that’s an opportunity. India doesn’t have a significant industry of domestic counterfeit, copycat handset manufacturing, and that’s an opportunity. India is a democracy, rather than an authoritarian, overbearing, one-party government ruled by the Communist Party, and that’s an opportunity.

But the biggest opportunity is this: India will gain more than 200 million new smartphone users in 2014 (people getting their first phone plus people movin’ on up like the Jeffersons from a feature phone to a smartphone).

By the end of 2014, India’s smartphone-using population will be bigger than America’s.

The challenge with India is that India phone buyers are very cost-conscious. You can’t just go into the Indian market selling selling the world’s highest-end phones and expect big sales.

India is both an opportunity and a challenge, but smart companies are rushing in.

Summarizing the respective strategies of HP, Samsung and Apple in the rising Indian smartphone market, can be done in one word each: big, cheap and old.

After HP’s bizarre gymnastics in the smartphone world — acquiring Palm only to kill it, followed by two years in the smartphone wilderness without a product on the market, HP is back. And it’s first phones are exclusive to India for now.

That company’s market research told them that phablets — giant phones — are the fastest-growing category in India, so they’re going big with a six-inch device and a 7-inch one.

Samsung is another pushing into India. That company’s strategy is to sell India-first or India-only phones that are relatively underpowered and somewhat inexpensive. Samsung started selling this week its Galaxy Grand 2 smartphone, a dual-sim phone that costs $374 unlocked. A cheaper single-sim model is coming soon.

Apple’s strategy is unique. Rather than making a phone especially for India, Apple is focusing on the iPhone 4, a phone that first shipped 3 and a half years ago.

Of course, Apple will sell plenty of iPhone 5S phones for wealthier Indians. But for the millions upon millions of first-time smartphone users, the iPhone 4 is a great strategy, and it’s the one that’s probably best for budget-minded Indian consumers.

Apple is able to sell the iPhone 4 inexpensively because it can benefit from economies of scale, the fact that factory infrastructure has already been developed and because it’s using components that have come way down in price since the phone first went on sale.

When I got pick-pocketed in Spain less than a year ago, and my new iPhone 5 was stolen, I went back to my iPhone 4. I used it for many months. It’s such a great phone. The camera is excellent.

More to the point, the iPhone 4 is not a phone that was ever designed or manufactured deliberately to be underpowered. It was designed and made as the very best phone Apple was able to build at the time.

And Apple’s strategy is better for the environment, ironically, and it’s one that Apple does and should use globally for establishing a range of phone pricing options.

For starters, the strategy incentivizes Apple to future-proof each new phone model, knowing that the phone will continue to be manufactured for up to 5 years. Just look at the iPhone 5S with its 64-bit processor. In a year or two, the market will be slowing saturating with 64-bit phones, and Apple’s low-cost option will already be a 64-bit phone that can run future 64-bit apps

Whether you agree with it or not, phones are status symbols. People tend to be either proud or embarrassed about their phone. But selling an older model of phone in a cost-sensitive market like India incentivizes second-hand purchases, which is the best way to help the environment. Nobody will know if you bought that iPhone 4 brand new, or used. And you’ll probably be able to get it cheaper used.

And, as I suggested earlier, using older models as a current low-cost option, is radically efficient. Samsung’s and HP’s India phones require factory re-tooling and poor economies of scale for some components. Apple’s doesn’t.

So Apple’s strategic selling of the iPhone 4 as the main phone for the fast-growing Indian smartphone market is a good one.

And as the Indian economy continues to grow, more Indians get richer and as the price of smartphones continues to drop, Apple will no doubt be there in force to offer the full range, from the old-best thing to the new-best thing.

(Picture courtesy of NPR)