Why Google and Apple Are Failing in IndiaNovember 25, 2015 by Jennifer A. Diffley
After winning over China, both Google and Apple may have assumed they'd have the same success in India. But this year proved the companies have much to learn.
Google and Apple have been unable to sway mass conversion in India. Here's why:
Most of the Western world views Google and Apple through the lens of omnipotence: they are simply so huge and so popular that it's unfathomable their presence could be negligible in other countries. But that, according to a 50% drop in Apple's market share in India since the beginning of this year, is precisely the case.
Though the iPhone 6S started selling in India on October 16th, Apple only currently holds a 2% smartphone market share in the subcontinent. Why? Because introducing a luxury item to a country that has a 35% poverty rate may have been a bit too optimistic. Apple has been trying to sell its older phones at deep discount and partnering with cellphone carriers to offer zero-down phones, but still the beloved brand struggles to gain a foothold.
India has over 1.2 billion people, just behind China, and that number represents enormous untapped smartphone adoption rates. While Apple has found its stride in China, it shouldn't have expected to yield the same success in India, and that points to a cultural blindspot. That misstep is something Google is starting to understand: its Android One is a total flop. How could Google--which set out to sell 5 million units in India--could have misjudged its consumer base so poorly? Three reasons:
Neither Google nor Apple is marketing to the impoverished, that's for certain, but both fail to understand the economic differences between India and China. The GDP of China is $9.24 trillion--India's is $1.87. That GDP translates to a giant per capita difference. Workers in India have been taking home substantially decreased pay since 2010 and now roughly half the country lives on about a dollar per person per day: at that rate, it would take three years to afford a $1,000 iPhone. So, no matter how many Indians may want an Android One or an iPhone, it's simply an impractibility.
Samsung currently controls about 24% of the smarphone market in India and that's because it offers cheap phones with big screens. Chinese smartphone maker Xiaomi has sold over 3 million smartphones in India since it entered the market last July. Though most Americans have never heard of Xiaomi, it is massively popular in China and has Hugo Barra at its helm. As the former VP of Android, Hugo Barra is a juggernaut in the tech world and well-poised to make tremendous strides in India. Xiaomi is a young company, but it is already valued at $46 billion and produced cellphones that are hip, powerful, and--most importantly--cheap. Smartphone manufacturers are flooding India with phones that look like iPhone 6's at a quarter the cost, and there simply isn't a compelling reason to fork over the money for an Android One when a similar phone can be had for a more attainable price.
3. Cultural Cachet
iPhones have become status symbols in the US and China, but they haven't reached that pinnacle in India. Social pressure goes a long way in convincing customers to buy something; without it, both Google and Apple find their marketing efforts infinitely more challenging.
There's another cultural factor that hasn't yet hit India: debt. Americans are willing to go into debt to pay for a smartphone (or Louboutins or limited edition Star Wars figurines...), but the concept of slapping everything onto a credit card isn't normalcy in many other countries. Indians are less concerned with visible shows of wealth than, say, Chinese or Russians, and less inclined to overextend themselves financially to obtain the newest smartphone.
So for designers hoping to tap into India's potential market, the lesson is clear: make it cheap, powerful, and give it a big screen. There has yet to be a single phone or company to spur the tipping point of India's smartphone revolution, but with the right combination of price and design, it may not be far off.