John Paczkowski

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A Big Year for Apple’s iPhone in India

Airtel_iPhone_5

Airtel

Now that it has carved some significant inroads into China, the world’s largest mobile market, Apple is turning its attention to the second-largest, as well: India.

In the fourth quarter, iPhone shipments to India were about three to four times what they were in the third quarter, according to new research from IDC. And the research house expects them to grow roughly 150 percent year over year in 2013.

“We have seen overwhelming demand for Apple iPhone in India, not just for the latest iPhone 5, but also the lower cost previous versions,” IDC analyst Ryan Reith told AllThingsD. “It’s a huge market with great opportunity for Apple.”

The reason for this growth? The new iPhone 5, obviously. But also a more aggressive approach to a big market that Apple has typically shied away from because of its price sensitivity and a distribution model the company previously found unappealing.

In India, Apple sells iPhones on the open market, not through carriers that subsidize them and in so doing lower their selling price. And while India is among the fastest-growing wireless markets in the world, it’s also highly price-sensitive. That’s been problematic for Apple, which has traditionally been unwilling to cut prices to drive volume.

But recently Apple has been working with Indian distributors to offer installment-based payment plans for the iPhone. And it has significantly ramped up its marketing efforts in the country, in some cases working directly with distributors on advertisements. Apple did this with TheMobileStore, a national retail chain that operates 1,000 outlets across India, and CEO Himanshu Chakrawarti tells AllThingsD the effort was a success.

“Following the launch of iPhone 5, we met Apple, and both of us felt that we could significantly energize entry to mid-level smartphone buyers to upgrade to an iPhone,” Chakrawarti said. “[We ran a campaign] in January 2013 that was very successful. Our sales jumped about 200 percent.”

Evidently, Apple is seeing some decent early results from such efforts, though clearly it has its work cut out for it. The company has a piddling share of India’s smartphone market, which is currently dominated by archrival Samsung. But it seems to be working to change that — as much as it can afford to right now, anyway.

As CEO Tim Cook noted on Apple’s last earnings call, India is not as high a priority as certain other markets, like China.

“I love India, but I believe that Apple has some higher potential in the intermediate term in some other countries,” Cook said. “That doesn’t mean that we’re not putting emphasis in India — we are. We have a business there; that business is growing, but the multilayer distribution there really adds to the cost of getting products to market. So we’re going to continue putting some energies there, but from my own perspective, in the intermediate term there will be larger opportunities outside of there.”


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik