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The average price of a smartphone in India in 2022 was $206 excluding taxes, Apple's smartphones go for $898. With discounts Apple is now bringing the price down to below $500. In 2019 phones over $500 made up 3% of the market. This has increased to 6% in 2022. Apple is counting on this share of the market going up and prices being brought down below $500 to build a larger share of the market. Its market in 2023 is about 5% in India compared to 22% in China.

In China Apple has its own stores. It is only now opening its first store in Mumbai. This and building manufacturing facilities in India could be the way to increase its share of the market in India to where it provides an alternative comparable to the Chinese market. This is the first time after the pandemic and the supply chain issues, the idea of friendshoring, that Apple is reorienting its policy for making India a key part of its supply chain and market. 

 

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With the introduction of the iPhone 4S, Apple announced the iPhone 3GS will be offered free, and the iPhone 4 for $99. This puts Apple iPhones priced to compete with smartphones in the middle and lower price ranges in the market. The free iPhone is a model first introduced in 2009. As the expansion of the smartphone market is now ocurring at the low and mid price ranges, companies making smartphones using Google's Android software and Blackberry's RIM are targeting this market. In the U.S., as of the end of July 2011, 82 million Americans owned smartphones, increasing 10% from the prior quarter, according to comScore. 42% of U.S. smartphone users use Android phones, only 27% use Apple phones, as of the end of July 2011, because of the price difference. In India Apple iPhones have barely made a dent because of large price differences. Rapid growth expected in emerging markets will also make this low end of the smartphone market attractive for Apple.

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Xiaomi, a maker of smartphones in China, traded for about US$2.15 per share on the Hong Kong stock market on July 9, 2018 after its IPO. Xiaomi was valued at US$43 billion, about half of the value that was expected. Reasons given by experts are that Xiaomi is one of a number of smartphone makers in the highly competitive Chinese market. Xiaomi has about half of its sales in India and other countries where it sells low cost smartphones with more value based on features included. Problems that it experienced in Brazil in connecting with national carriers made investors cautious about Xiaomi's market position in other developing countries. Limiting its profitability is its position as a hardware maker in a competitive market, without the profitability of other internet companies. Xiaomi surged in the last decade in China as a local producer of smartphones that provided features of more expensive brands at a lower price. It built a following as a quality local brand in China. ...

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In India 70% of smartphones sold in 2015 cost less than $150. Apple's market share in India is really small at about 2%. Apple iPhone sales were up 56% in the 1st quarter of 2016 over the same quarter in 2015, according to CEO Tim Cook. iPhones cost about $300-$1000 without a data plan in India reducing the size of the market. In May 2016 Apple applied for approval from the Indian government to sell refurbished or certified iPhones at lower cost. In India the best selling iPhone is the older 5S which costs about $300. It makes up 50% of iPhone sales in India for 1st quarter in 2016, according to Counterpoint. Apple has no model at the low end, as the SE model will cost even more at $500. The Indian market is growing at 26% in 2016 over prior year, making it the next largest market after China. Another approach Apple is taking is seeking approval to open its own retail stores and sell online. A waiver has been given by the government for using locally made parts. Apple's high prices and margins remain a significant barrier in opening up the Indian market, when lower priced Korean and Chinese smartphone models offer attractive options to price conscious Indian buyers....

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Apple shares are down 25% says this WSJ article and asks the question whether Apple's best days are past. In the fastest growing markets in Asia and Africa, Apple iPhones are beyond the reach of about 95% of the population. The number of Apple iPhones sold in India have dropped 40% in 2018 compared to 2017. Apple's market share in India has fallen from 2% to 1%, according to Canalys research firm. The $1.8 billion in Indian sales is about half of what Apple executives had hoped for when Tim Cook visited India in 2016. Some call it a rout. Tim Cook seldom mentions India now. At the center of this is Apple's reluctance to change its business model of getting the highest margins, making not a range of handsets, but a few models selling at high prices. This is the strategy that Apple has used to revive the company from near bankruptcy in 1997. Competitors including Xiaomi, the Apple for China and India, tweak their phones constantly to address local concerns for battery life, and lower prices to get market penetration. Only 24% of Indians have a smartphone and India is fastest growing market. Friction with the Modi government which cannot be favorable to Apple's plans to push a high  margin product when competitors have similar but better value packages.   In price sensitive markets of Africa and Asia most people buy phones outright and use pay as you go plans, Apple is not popular. Even in China Apple's market share is down from 12.5% in 2015 to 8% in 2017, according to Canalys. Apple is reluctant to make many models offering lower prices and to address concerns such as battery life in India. In India 39 million people will add smartphones in 2018 with 75% costing less than $250, 95% costing less than $500. In Apple's lineup the iPhone 7 costs around $550. Competitors such as Xiaomi, OnePlus, Oppo, and Vivo flooded India with smartphones costing less than $200. Unlike Apple which spurns market research these companies do extensive research work on local situation. OnePlus has focussed on battery life and gained 30% share of the premium segment to Apple's 25%. By making the devices in India these companies avoid having to pay the 20% tariff. Apple has so far not put up a new plant with the restriction that India places of single brand retailers over 51% foreign owned to buy locally 30% of manufacturing materials. The Modi government felt Apple was not focussed enough on bringing high tech jobs to India and helping local manufacturing, a perception not conducive to expansion in India where "Made in India" is the government plan. This means opening Apple stores in India is less likely now.  The turnover of Apple India executives is also increasing with 3 new CEO's 2017- 2019. Apple's strategy of targeting wealthier Indians makes it not even a fringe player in the Indian market down to 1% of the market. Just as it shrinks in the Chinese market where most customers are price sensitive and the economy is slowing.   ...

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Joanna Stern of the WSJ uses the original iPhone that came out in 2007 for one day in June 2017 and sees how it felt to use the introductory version. The original one worked on a 2G cellular network. It took about a minute for the president's Twitter feed to fully load in the old phone's Safari browser, it now takes 5 seconds. A lot has changed with the smartphone revolution in ten years. Lunch spot search results, Stern points out, might take longer than the time to eat lunch in the Maps App with that old phone. No emojis, predictive text, no Siri, and no third party apps, no Apple Music or Spotify, all that came later. The 2 megapixel camera took decent shots but not without good light. What is useful in Joanna Stern's little experiment is that it makes one reflect on how quickly people forget, how so much is now taken for granted as smartphones change the way people live their lives and interact with technology on a daily basis. Not mentioned here is how common smartphones have become with the Android versions made in China offering so much more for the budgets of ordinary people. And how it has changed the lives of billions of people in China, India, other parts of Asia and Latin America, bringing them into contact with the outside world. What is also interesting in this sense is that what took a huge effort over many years and many disappointments- the idea of a touchscreen that works- shows what an idea and the courage to persist in the face of innumerable hurdles can accomplish. See the link to how  Steve Jobs accomplished this. Daisuke Wakabayashi talked with Apple engineer Greg Christie in his article-"Apple Engineer on iPhone's Birth," Wall Street Journal, March 26, 2014. Christie had worked on a digital personal assistant at Apple in 1996, one that had tried the first touch screen Apple made. The device failed in the market. In 2004, eight years later the touch screen is the idea Jobs had Christie work on again. Many frustrations and obstacles later the first smartphone was developed by 2007. It took 10 years and undaunted effort which is the Apple story under Jobs. ...

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How tariffs will increase prices depends on product, on supply. Commodity products in wide use will have many suppliers and the price increase will be small. On smartphones and cars with imported components higher and this will lead to shift in production to the US, India and Vietnam with longer term benefits reducing concentration of supply chain in China. In the short term there will be some price increase. Yet on some products consumers can shift demand to alternative products or home made products.

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Eric Schmidt, former chairman of Google, says that dependency taken to this extreme where TSMC makes 92% of the advanced semiconductors needed for every smartphone, laptop and missile systems, needs to be quickly corrected. He says America's technology advantage could face serious damage with the Taiwanese production lost in the event of war or missile attack. The supply chain is already at risk with over 70% of supplies of silicon, tungsten, and gallium in the supply chain under China's control. Surprisingly Schmidt does not ask for action beyond Congress authorizing the $50 billion investment proposed for American manufacturing of semiconductors. What is needed as Andy Kessler has proposed in WSJ is to ask Taiwan and South Korea to invest in the US and allies such as  India where production cost challenges can be met with the engineering manpower and facilities as has been done in health care and vaccines manufacturing. Only token or small investments have been made by South Korea and Taiwan in the US compared to what is required. The US should ask for this to be done as part of the exchange for security guarantees that the US is already making for South Korea and Taiwan. It is also the responsibility of South Korea and Taiwan to make these and other investments in other technologies considering it as its obligation to the Free World. For too long countries in Asia that have benefited from US assistance have ignored their reciprocal obligations to the US. Japan, South Korea, Taiwan, and China have all benefited from US technology sharing and assistance. It is only an egregious example that China has put itself in the situation where Japan found itself or placed itself in the first half of the twentieth century.  ...

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Amazon is tackling the Indian market by addressing the need of rural shoppers in all parts of India- home to nearly 800 million people. Here WSJ shows how this works with a customer in Dhowachal, in the northeastern state of Assam, who had no access to stores except by travelling for hours to the nearest town.  The customer is a teacher who received an Amazon delivery of pairs of jeans, socks, curtains, glasses and other items. Rural shoppers in India spent about $400 billion in 2017. Barclays estimates Amazon had $7 billion in gross merchandise sales volume in India in 2017, about 2% of what it does worldwide. More than 80% of customers in 2018 are from outside India's largest cities.  To do this Amazon has changed its app to work on cheaper smartphones and patchy cellular networks, added hundreds of thousands of Indian language descriptions of products and videos. It has also opened physical Amazon stores to teach people how to order online. Tens of thousands of distributors were added to deliver packages and take cash or digital payment. Amazon is spending $5 billion in India to set up a logistics network and warehouses, including staff and content development for Amazon Prime. In doing this Amazon has learned from China where Alibaba and other online retailers have grown seven fold by reaching rural areas. Amazon could not compete with Alibaba in China. In India Amazon has no strong local competitors like Alibaba. It is learning how to operate in India. The app offer tips on how to order, no email is needed, only a phone number, machine learning translates all descriptions into Hindi. Icons work well. A digital wallet lets customers without bank accounts or cards to pay or get money back. Amazon is investing aggressively using an advertising campaign and discounts to pass Flipkart which WalMart bought for $16 billion in 2018. Amazon is trying new ideas in India's situation where small stores often closet sized sell a limited number of products often going through multiple middlemen resulting in high prices. Amazon is now enlisting these small stores as package depots in its own unique distribution network. The small store gets an 8-10% commission on sales for helping guide shoppers make a purchase. In Amazon's unique "I Have Space" program 20,000 mom and pop stores in remote areas of India offer to take packages and deliver in neighborhoods for a commission. They get a uniform, a bag and a week of training. Many of these store owners know the addresses in their neighborhood having lived there a long time. The entire effort shows Amazon has adapted its delivery effort, logistics and payment systems to Indian conditions in a well planned way. Compare this to the failed effort by Apple in India, with high management turnover and lack of understanding of Indian conditions and pricing, and no real plan to tackle the Indian market.     ...

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Xiaomi is China's leading brand. It is very different from other companies in China and America. It is tightly controlled by its founder Lei Jun who has built a loyal following for the brand  through fan clubs and creating an enthusiastic following. Because the firm is run by founder Lei Jun it can make quick decisions to enter a market. Lei Jun was a computer science student in Wuhan in 1987 as China opened up to the world.  By 2017- in three years from being zero in the Indian market place in 2014- Xiaomi had become the largest smartphone company in India. The company was launched in 2010. Profit margins are thin about 1% in a very competitive pricing market.  Metrics are based on revenue per user of $9 per user from an installed base of 190 million smartphone users, spending 54 minutes a day using Xiaomi's app, game and other services, or 20% of the phone use time. Revenue per user comes from advertising, and from commissions on the apps and games it sells to its user base. In 2015 Xiaomi had a loss, in 2016 sales dropped, in 2017 new products led to a resurgence in the market with sales increasing 68%. As Xiaomi goes into its IPO, experts say much of the $10 billion from the IPO could go into reinvestment as Xiaomi reinvents itself and moves into other internet business. ...

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The story of Lee Kun-hee who over 3 decades transformed an obscure electronics parts maker into the company Samsung is today, as a leader in smartphones and electronics. He was born in 1942, during the Japanese occupation of Korea and lived through the war years. He studied at Waseda University in Japan and George Washington University in the U.S. By the time he took on the position of CEO in 1987 from his father Samsung had grown from roots as a small fish and produce trading firm. It had then added after the war with Japan and the Korean War in the 1950's other lines of business such as sugar refining, textiles and diversified later into simple electronics such as radios and microwaves.  He was for change and once said to Samsung employees "change everything, except your wife and children." He was both mentor and inspiration at Samsung, with self-discipline and resolve to make Korean companies match their Japanese counterparts in technology and growth. He was like Konsuke Matsuhita of Panasonic in some ways- keen on learning new technologies and bringing excellence and quality to the Korean peninsula. Companies in India and other developing countries can look to the experience of South Korea in making similar transformations in South Asia and beyond. ...

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Sony is trailing badly in the smartphone business in 2014-2015. Global market share is at about 3.1%. Sales in China have failed to gain with only 0.4% market share, as Xiaomi has made large gains in China in 2014, and with other low cost competitors such as Lenovo. Even in India once considered a promising market Sony smartphone sales market share is at about 3.2%. Market share is about 6.9% in Europe and 14.4% in Japan, according to Counterpoint Research. The mobile division is cutting staff by 2100 from current level of 7000, as mobile becomes Sony's only money losing unit. The head of the mobile division and CEO Hirai are now considering options including selling the unit or joining with third parties. Mr. Totoki, head of the mobile division, says Sony has learned through this experience that creating customer enthusiasm for products involves much more than simply putting together powerful parts.

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Millions of people who are first time users for whom affordability is an issue in countries from Nigeria, Ivory Coast to India, Indonesia, are connecting to the internet. This time not with smartphones made by Samsung or cheaper Chinese smartphones made by Xiaomi or Huawei, but by using a new smart feature phone that cuts down the price such as the Jio phone by Reliance Jio in India. This costs only about $25 compared to $100 to about $300 for lower cost smartphones These phones provide basic features, some apps, messaging, internet access at low cost. About 3.4 billion people without the money to buy costlier smartphones are turning to this just like people did 20 years ago with lowcost Nokia basic phones until smartphones appeared. Monthly cost for mobile data access to internet is $2.50 a month for all the mobile data he needs or Rs. 1750. Batteries last for days in countries where electricity is unreliable. A fruit vendor in New Delhi makes $80 a month or  Rs 5600. A Jio phone fo him costs Rs 1400 compared to paying Rs 7000 or $100 for a Chinese smartphone. Reliance partnered with Hong Kong's KaiOS Technologies Inc. which makes the most widely used operating system powering smart feature phones. Jio sold 60 million Jio phones and 370 million such smart feature basic phones are forecast to be sold in 3 years by 2022. Reliance Jio is being imitated by others. Orange SA of France has launched an inexpensive smart feature phone bundled with inexpensive mobile data plans in Ivory Coast, Burkina Fso and Cameroon and plans to put this in other former French colonies in Africa and Arab countries. WizPhone plans to introduce a $7 phone in Indonesia. KaiOS is working with Brazilian manufacturers to roll out cheap phones there.  In advanced countries Nokia is offering revamped versions of its candy bar shaped phones with added web access to enthusiasts. These cost $100. A whole new group of people who could not afford a smart phone are now being connected after Jio's pioneering effort in India. ...

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Friedman points to the need for workers to have a Curiosity Quotient or C.Q., and Passion Quotient or P.Q., in addition to Intelligence Quotient I.Q. to compete in a digital hyperconnected world. The ubiquitiousness of tech devices, instant access to information, learning and knowledge, for people in remote cities to smaller towns everywhere, reduces the span in which a particular knowledge subset is relevant. New developments take place faster creating continual obsolescence and need for constant learning and curiosity.

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The documentary "Last Train Home," directed by Lixin Fan, shows the life of migrant workers and their families in China. Fan sporadically spent 3 years with one family, Zhang Changhua and Cheng Suqin, to capture glimpses of this family's life as one of China's 130 million migrant workers. The family left a village in Sichuan province, to work in a factory in Guangzhou, which manufactures denim jeans. For 7 days a week -once working 15 hours a day for 29 days straight- the Zhang family works continuously, just to send money back home to the grandmother who raises 17 year old Qin and another child. The daughter is rebellious as she is resentful of the parent's absence. This is the story of migrant families throughout China, the quiet hidden ordeal, that is behind the cheap products available in western countries. And Fan documents this well with scenes at the railway station, as the family catches the last trains back to Sichuan, for the yearly trip back to the village. There is a whole society in transition, and there are many sides to this story, this is the human one of families caught up in this transition. Lack of farm subsidies and taking over of farmland for building and construction has hurt life in agricultural areas. The Communist party has made dissent difficult. And the imposition of a decades old registration system that denies education and social services to migrant workers from the villages, creates huge strains on family life. Fan says- before the showing of this film at the IFC Center in Greenwich Village- that he hopes to raise questions in the minds of viewers. Does the blame for this go to the government, the factory owners and companies, or the West, something Fan says he is not able to answer. That there is little official opposition to the film- in the same manner that the suicides at Hon Hai, and the factory conditions there and in other factories across China, are being freely reported- suggests that China is coming to terms with the different angles from which to view the economic transition that has taken place over the last two decades. It is also a belated recogniton of the whole range of questions raised by a singleminded policy of manufacturing for western markets, especially when these markets with debt-laden consumers may present huge uncertainty in the future....

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Galston cites a Federal Reserve Board of Chicago 2014 study showing setbacks for black people in achieving improvement in income status. Even for children born into middle income black families about 55% are expected to fall below middle income status compared to 36% for children of white middle income families. The problem is not just the gap as Galston points out but what it says for the declining income mobility for the white middle class when 36% are likely to see declining status and prospect for the future, and 23% will see no improvement. Overall it shows a lack of income and social mobility for whites and minorities alike compared to the past improvements since the 1960's, not a bright prospect and less hope for the future the way things are, and why so many of the establishment candidates and existing policies are being questioned by voters.