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Apple in an Aggressive Battle to Win the Indian Market

Image by Piyapong Saydaung from Pixabay

Last week Apple unveiled its third-gen iPhone SE at its “Peek Performance” event. The new phone, launched on its first event of 2022, comes with a similar iPhone 8-style body (same as the iPhone SE 2020) but has a new processor, support for 5G, and a higher price tag.

The same A15 Bionic technology used in iPhone 13 powers it. The A15 chip provides better processing rates; Apple claims that the new SE has a CPU that is 1.8x faster and a GPU that is 2.2x faster than the iPhone 8. While not every component of the new phone will make use of all of that capability, such performance means that future versions of iOS will be supported for years to come.

The iPhone SE includes a single 12-megapixel camera on the back and a 7-megapixel camera on the front. The A15 chip also delivers a slew of new features to the cameras, including Smart HDR 4, Photographic Styles, and Deep Fusion, among others.

Despite the 5G functionality, which can drain a phone’s battery quickly, Apple claims that the new SE has better battery life than the previous model. These enhancements could be attributed to the A15 processor and iOS 15.

However, numerous things remain the same despite all of the internal changes. Face ID is not available on the iPhone SE, which still has a home button with Touch ID. The 4.7-inch LCD is the same as the one seen on the 2020 iPhone SE and the 2017 iPhone 8. The phone’s back is still glass, but Apple claimed it was the “toughest glass on a smartphone” at the announcement. However, unlike the iPhone 12 and 13 series, the SE does not appear to have a ceramic shield over the display.

The iPhone SE will be available starting March 18 in three colors: midnight (black), starlight (white), and Product Red, with pre orders starting on Friday, March 11.

The original iPhone SE cost 399 USD when it was released in 2016, and it was made up of an iPhone 5S’s body with an iPhone 6’s internals. The iPhone SE was a surprise hit for Apple, appealing to those looking for a compact, cheaper iPhone.

Apple redesigned the iPhone SE in 2020, giving it an iPhone 8 chassis and the A13 chip from the iPhone 11. The phone demonstrated how much of an iPhone’s capability is derived only from its processor. The second-gen iPhone SE was the only iPhone Apple sold that had the basic iPhone design: a broad forehead, chin, and home button, till today.

This new version of the low-cost iPhone, priced at 429 USD, aims to capitalize on Apple’s success in India. The winner of an estimated 1 trillion dollar market in the world’s third-largest digital economy will grab the lion’s share (1, 2).

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Apple India Growth

Apple’s new 5G SE is priced 47% cheaper than its flagship iPhone 13, which positions the company to compete for the lower-income market of India, where 500 million+ customers still don’t have access to smartphones.

Apple witnessed a 2x jump in its shipments to India last year, totaling over six million (3). And estimations suggest that these numbers will grow another 25% this year.

According to Navkendar Singh, research director at IDC India (4), factors like the COVID-19 pandemic and highly competitive limited-period pricing, which brought the cost of the 2020 SE phone down 25k INR, drove its sales in 2021.

Singh further added that the 2022 iPhone SE is likely to see demand from students and those who aspire to buy an Apple device without paying the high prices for its flagship phones.

“The new iPhone SE may get discounts and offers during the festive season, which is still a few months away, and the supplies should increase by then. As a result, we can expect the device to do well through the year,” he said.

However, Singh also noted that it is unlikely for iPhone SE to eat the lion’s share of the market as it expects since it is dated in terms of its features. “Hence, a typical buyer who may look at a OnePlus phone may not consider it,” he remarked.

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India’s Budget Smartphone Market is Highly Competitive

In addition, it is also worth highlighting that Apple is trying to win an already fierce market. It will have to compete with Xiaomi, the current market leader in the segment, and Reliance, the Indian tech giant.

Last year, Xiaomi sold over 169 million low-budget smartphones in India. At the same time, Reliance offers its new JioPhones only at 87 USD (Suggested Reading: Lucrative Opportunities to Capitalize on India’s Massive Mobile Growth).

Apple already controls 44% of the $400+ smartphone market in India. A $429 iPhone might help them grab the estimated 59 million new 5G phone customers by 2025 (5).

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Tech Companies’ Battle For India

Apple is not alone in fighting market share in India. Last year, tech companies from the United States invested more than 1.82 billion USD in India, a 2x increase over the previous year. Amazon is also vying to dominate the country’s e-commerce sector alongside Reliance.

Amazon’s revenue in India increased by 49% to 2.1 billion USD last year, and it aims to reach 10 billion USD by 2025. The two corporations will now compete for the rights to broadcast India’s premier cricket league in a multibillion-dollar bidding battle (6, 7).

However, it seems that Apple’s own success is becoming a burden as it continues to drive growth in a saturated and fierce market when it comes to pricing.

While iPhone SE is fresh enough to attract attention, it looks bland and outdated, which may feel like a second-class choice. And people are more likely to purchase it not because of what it looks like or its features, and they are only purchasing it because it is a cheaper iPhone.

In addition, it still looks like the previous SE probably because Apple doesn’t want it to be easily confused with its higher-end iPhones, and it won’t be good for sales.

It is also cheaper for Apple to reuse its tried and tested components than design anything new for a budget phone. The only major feature the phone offers is 5G, and after all, it is a major selling point these days.

Apple has likely made one accomplishment despite all these, putting pressure on Android devices at a lower end.

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The Way Forward

By 2025, India anticipates having a 1 trillion USD digital economy, while its overall GDP will grow to 5 trillion USD (8). In other words, whoever has the most influence over Indians’ access to entertainment and digital services stands to benefit the most.

During the event, Apple CEO Tim Cook boasted that the business has been attracting more new iPhone users than ever before since last year, without revealing exact figures. “We’re looking forward to building on this momentum with the new iPhone SE,” Cook stated (9).

Even though Apple makes less money from the iPhone SE than it does from the more expensive models, it will provide the corporation additional opportunity to sell subscriptions to streaming music, streaming media, gaming, and other products that have become big moneymakers. Tuong Nguyen, a Gartner smartphone analyst, acknowledged (10).

Nguyen explained, “It’s all about broadening the ecology. It’s always good when Apple manages to push you to upgrade your phone. However, it’s even better if they can persuade you to subscribe to everything they offer, as this generates recurrent money.”

Notably, Apple’s service sub-segment had emerged into a thriving business, garnering 68 billion USD in revenue last fiscal year, up from 24 billion USD the year before it launched its music streaming service. Apple’s success in services has also prompted antitrust litigation and proposed legislation to weaken its dominant control over its iPhone app store, which collects hefty commissions from digital transactions completed on the device.

Despite supply constraints that have limited production, the iPhone remains Apple’s most critical resource, with sales of 192 billion USD in its latest financial year.

Regardless, Apple is set to win big if it expands its reach in India. India is about a decade behind China in terms of technological advancement. India’s smartphone market may increase by 130 billion USD and its e-commerce industry by 25 times if its economy grows at the same rate as China’s.