Equal monthly installments and cash back schemes have worked wonders for Apple in India as iPhone's monthly sales have risen by 300% to 400% over the last few months. The Cupertino-based company has managed to dramatically push up its sales by figuring out trends of consumer demand and changing the iPhone's perception from being a high-end product to an affordable one.
Compared to average monthly sales of 70,000-80,000 smartphones before the EMI schemes were offered to consumers in India iPhone sales have zoomed up to stratospheric levels, analysts at Credit Suisse said. "From our channel checks we believe that iPhone sales are nearing 400,000 units per month in India - that is nearly 3% share of handset sales for a single top-end product in a market that has long been dominated by low-end feature phones," Credit Suisse's research analyst Sunil Tirumalai said in a note to clients that was accessed by ET.
Apple does not reveal its sales figures for a particular market. The company did not comment on the sales figures quoted by the agency.
About four months ago, Apple began its EMI scheme that offered potential buyers to make a partial payment of iPhone 4 and 4S models upfront and pay the rest of the amount in installments over 6 to 12 months without paying any interest. The super aggressive pricing and advertising blitzkrieg on the iPhone 4 and iPhone 4S older models that are not sold in any other country, created a strong foothold for iPhone as a product in India.
"The 4-9% implicit discount coupled with the option of easy EMIs spread over 6-12 months became popular. Within a few months, our discussions with handset retailers indicated that iPhone sales went up 3-4x, forcing companies to respond," Tirumalai added.
The Swiss brokerage firm and research agency said its estimates were based on checks with mobile store retailers across the country and from distributors mandated to sell Apple products. In September last year, Apple changed its retail strategy from partnering with telecom operators in India (Bharti Airtel and Aircel as its preferred partners), and brought on board Redington and Ingram Micro as official distributors for its handsets. IDC's Asia-Pacific Mobile Phone Tracker for October-December 2012 revealed that Apple increased its value share in the smartphone market rapidly to 15.6% from 3.9% in the previous quarter while its share in shipments rose to 4.7% from 1.3% in the same time.
Korean smartphone maker Samsung that led with 38.8% share in value and 33.2% share in volumes in the fourth quarter offered more number of models to consumers on EMI schemes. Galaxy Note II almost matched the EMI payment of iPhone 5 as it sold for 12 EMIs of Rs 2,999 each compared to a down payment of Rs 16,990 for the iPhone 5 followed by EMIs of Rs 2,376 for every month in a year.
By April, Apple pushed the pedal harder by offering an 18% cash discount on top of the earlier iPhone 4 offer, thus nearly taking away the down-payment. This resulted in an effective 23-27% discount on the product which made it an affordable option for new smartphone buyers rather than a premium product. This time, apart from Samsung that began selling its flagship S4 on monthly installments, other rivals like Nokia and BlackBerry also joined the race.
However, in the smartphone price wars, telecom operators ended up with most benefits as larger smartphone sales resulted in higher data usage and thus, higher data revenue. The number of data subscribers for Bharti rose to 43.4 million in the fourth quarter ended March 31, 2013 from 41.4 million in the three months ended December 2012. The country's largest mobile phone company's average revenue per user (Arpu), an indicator of profitability, rose by 16% in a quarter - from Rs 47 in December 2012 to Rs 55 in March 2013. Idea Cellular's blended data Arpu (2G and 3G) was Rs 55 for the three months ended March 2013, up by Rs 3 over the previous quarter. Data ARPU for 3G subscriber babase had risen to Rs 105 against from Rs 97 in the same period while each 3G subscriber was using an average of 608 MB Megabyte. The number of customers taking up 3G plans from Bharti Airtel has also risen by 23% in the same period, indicating rising demand for high-speed data services as more and more consumers shift to smartphones.