Not an iPhone SE or iPhone 12, Apple’s move is a concern for Android companies

As the launch date for the iPhone 12 (September) is near, iFans in India have received a very special news: Apple has begun to assemble iPhones in the world’s most populous country. Thus, iPhone 11 will be the latest name in the iPhone list “Assembled in India”, following the iPhone XR, iPhone 7 and iPhone SE (2016) in the past. As expected, iPhone SE will also soon be transferred to production in India.

Production in India has a special meaning for those who want to buy an iPhone. Due to policies promoting domestic production, the Indian government imposes very high taxes on imported smartphones. The “Assembled in India” icon will help iPhone 11 price in India plummet, increasing competition with high-end Android smartphones.

Very soon, Apple will deep into the market is considered “home” of Android.

For Xiaomi, Samsung and OnePlus, this is really bad news. Since this market boomed in the mid-2010s, India has been considered the “home ground” of Android. Because the market share of iPhones in India is only 2-3%, the whole piece of lucrative pie (1.38 billion people) is in the hands of Android manufacturers. Currently, Xiaomi occupies the No. 1 position with 30% market share, Samsung ranks No. 2 with 24%. Even less well-known names like Vivo, Realme and OPPO have smartphone sales that are 3 to 4 times higher than Apple.

However, it is the current small market share that has made India a potential destination for Apple on the journey to recover. Since iPhone X, both iPhone sales and revenue have repeatedly declined, showing that traditional Apple markets like the US, Europe, Japan … have saturated. A new market like India promises to be the key to Tim Cook can reverse this trend.

By the end of 2020, the Apple CEO said India is one of the few markets where Apple still maintains a 2-digit increase. In fact, Apple began promoting iPhone business in India in 2018, when it carried out a complete restructuring of its distribution strategy in the country.

Not an iPhone SE or iPhone 12 Apple s move is a concern for Android companies | Phone

iPhone “Assembled in India” will avoid import tax of up to 20%.

Android rivals need to be especially worried about Apple’s future moves, as it only focuses on the most lucrative, most profitable segment: the premium segment. Since last year, India has become the next testament to the “Android / iPhone paradox”, when Android smartphones, despite overwhelming sales in general, allow Apple to dominate the high segment. According to market research firm IDC, Apple has “dominated” the smartphone market of $ 500 or more since the second quarter of 2019. For every 4 smartphones sold in this segment, 3 carry the Biting Apple logo on the back.

The key weapon for Apple to establish this success is the iPhone XR, the iPhone model Apple began “Make in India” in the third quarter of last year. The attractive launch price of iPhone 11 was also considered as an important factor to help boost sales in this very popular Android market.

By dominating the premium segment, Apple is also surprisingly profitable. Samsung India’s sales are 10 times higher than India but its profits are only 5 times higher – in other words, an iPhone sold in this billion-dollar market earns twice as much as a Galaxy. Xiaomi is even worse: despite taking the No. 1 position in market share, in the fiscal year of 2019 Xiaomi India could not even make a profit from smartphones or other devices.

Not an iPhone SE or iPhone 12 Apple s move is a concern for Android companies | Phone

Android’s nightmare: dominating the market share in general but leaving Apple monopolizing the high-end segment.

As Apple continues to accelerate its business in India, Xiaomi’s nightmare will continue. Due to India’s import tax of up to 20%, the shift to production in India could help the iPhone SE strike further into the mid-range segment. Currently, this is still the most important segment of Xiaomi in particular and Android companies in general, because the price is neither too expensive nor too cheap, which will help manufacturers balance sales and profits. The appearance of iPhone SE can completely change the outcome of the battle.

Q1 data shows Apple India growing by 71%. This number will increase further when the iPhone SE is “Make in India”. The strength of this iPhone is undisputed: even in the 2nd quarter devastated by Covid-19, global sales of iPhone SE reached 12-14 million units. The other iPhones are even more successful: the iPhone XR and iPhone 11 take turns taking the No. 1 spot in the world, the iPhone 11 Pro Max or the iPhone XS also often “top”.

Foxconn or Wistron factories in India will bring this powerful iPhone army to the world’s second most populous country. As U.S.-China trade tensions increase, and as Covid-19 shows a need to diversify its supply chain, it makes sense for Apple to expand production in India. Android’s “home turf” will have to welcome another extremely annoying opponent – one who is late, but has the potential to “eat” all the profits of those who go before.

[ Æsir Tales ]
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