iPhone's rise in India: How Apple is taking on Android in premium segment

While Android continues to be the more popular smartphone platform in the country, iPhone has gained a stronger foothold among premium buyers

In 2007, Steve Jobs unveiled the revolutionary iPhone, which ran on Apple’s patented operating system iOS. A little over a year later, Google would go on to introduce the first Android phone, the HTC Dream, sparking a rivalry that would continue for decades.

 

“I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this,” Jobs famously said in a 2011 biography by author Walter Isaacson.

 

While the long standing tussle between Apple and Google over their respective operating systems (OSes) has been well documented, the iPhone maker’s growing success in the Indian market may have rekindled the “Android vs iOS” debate.

 

Last week, Apple Chief Executive Officer (CEO) Tim Cook announced an all-time revenue record in India yet again for the September quarter, driven by high demand for its latest iPhone models and strong iPad sales.

 

As the iPhone continues to witness increasing adoption, especially among Gen Z buyers, Apple’s market share in India is growing in strong double digits much ahead of the broader market.

 

The smartphone major has now cemented itself as the top dog in the premium segment, despite India being a largely Android market.

 

“I see this as a failure of Android as an operating system in the premium category,” said Faisal Kawoosa, co-founder and chief analyst, Techarc, a market research firm.

 

“Android has not been able to empower original equipment manufacturers (OEMs) to deliver the experience that a premium consumer is looking for. In the premium segment, the benchmark continues to be Apple iOS,” he added.

 

Android vs iOS

 

While Android continues to be the more popular smartphone platform not just in India, but globally, analysts say that the Google-owned operating system’s shortfall lies in allowing Apple to gain a stronger foothold among India’s premium buyers.

 

“Ten years ago, the iPhone was considered flawless. Android faced problems where their devices used to hang, the UI (user interface) was imperfect, cameras were sub-par, and premium apps did not work well. That is where Apple built good equity among consumers in terms of positioning,” said Kawoosa.

 

While Android has, over the years, improved on these issues, its perception as an imperfect product remains, he added. That, coupled with a lack of competition among high-end device makers — barring Samsung — is allowing Apple to gain a large market share.

 

“There is a very strong perception favouring iOS in terms of security, because it is a closed ecosystem. Android is open source, which also makes the OS exploitable. Apple offers much better privacy,” added Kawoosa.

 

According to market trackers, premium users focus more on reliability and privacy. As such, Apple’s consistency with respect to security, camera performance, and user experience, among others, seems to be giving the company a leg up in India’s premium market.

 

While Android has made similar improvements in security and user experience, these updates are not articulated well enough to Indian users at various points of sale (POS), say analysts. 

 

Apple’s rapid growth

 

Apple’s market share in India has seen an exponential rise over the past few years. The firm has grown from just 1 per cent share by volume in 2019, to six per cent in 2023, according to data from the International Data Corporation (IDC). Analysts project the Cupertino-based firm to reach an 8 per cent share by the end of 2024.

 

Although much of this growth has come on a relatively smaller base, Apple’s share in the Indian market by value, perhaps, paints a more accurate picture of its growth. The iPhone maker went from just 4 per cent market share in terms of value in 2019, to bringing in as much as 23 per cent of overall smartphone revenues in 2023, IDC data showed.

 

“As of the last quarter, Apple is bringing in almost a quarter of the revenue of the overall Indian smartphone market, at a market share of 7 per cent,” said Navkendar Singh, associate vice president, Devices Research, IDC.

 

The company continues to grow in double digits year-on-year (Y-o-Y) between 15 per cent and 20 per cent, in line with the premium smartphone market, but much ahead of the overall market, which has grown just 3 per cent in the September quarter, according to a report by research firm Counterpoint.

 

“In India, a lot of new young and aspirational users are entering the Apple ecosystem for the first time. We are also seeing a very strong upgrade rate from iPhone users,” said Tarun Pathak, research director, Counterpoint Research.

 

While the company has increased its focus on its newer iPhone models, in India’s price-sensitive market, Apple is seeing older iPhones do well for it. Most of the company’s sales this year were driven by the iPhone 15 and iPhone 13, aided by festive season offers.

 

“During the festive season sales, the iPhone 15 was selling at around Rs 55,000 and iPhone 13 at around Rs 45,000. During the whole year, two-thirds of Apple’s overall sales usually come from older generations,” Singh said.

 

Samsung vs Apple 

 

Apple’s success also lies in its ability to fend off the competition – primarily South Korean giant Samsung. Together, the two make up between 45 per cent and 50 per cent market share by value at roughly 25 per cent volume.

 

However, at $1,000, the average selling price (ASP) of Apple devices is more than three times that of Samsung’s $300.

 

“There is no other real (premium) competitor in the Android space apart from Samsung, and Apple is surpassing them. Apple’s ASP is around three times that of Samsung. Even as Samsung is doing two or three times the volumes, it is still not able to pip Apple,” Singh said.

 

The year 2024 has been difficult for Samsung. After being a market leader for the past few years, the South 

 

Korean phone maker slipped to the third spot in terms of volume in the June quarter, behind Chinese brands Vivo and Xiaomi.

 

According to reports, the company also planned to lay off as many as 200 executives in the Indian business across functions due to slowing business growth and poor consumer demand.

 

“Samsung got some of its pricing wrong in the first half of the year. 

 

We do expect a bounce back but it will be very difficult for the company to grow this year compared to last year,” Singh added.

 

Faced with stiff competition in the mid- and mass segments from brands like OnePlus, Oppo, Vivo, Xiaomi and Motorola, the company has reassessed its strategy to focus more on its premium offerings.

 

“Samsung adopted a strategic approach during the start of the year where they are now focusing more on the value side — their financing business is helping them. They also discontinued their N-1 flagship for the first time earlier this year, and have brought in aggressive pricing for their mid-range offerings like the A35 and A55,” said Pathak.

 

With this, competition in the premium market is expected to heat up.

 

Analysts are of the view that while Samsung has the advantage in terms of an innovative form factor via its foldable series and AI (artificial intelligence) offerings, consumers might still prefer the aspirational value and consistency of Apple devices.

 

Retail footprint

 

With India becoming one of its fastest-growing markets globally, Apple is looking to expand its retail footprint in the country, which might give it another competitive edge.

 

After launching two flagship Apple retail stores in India last year — Apple Saket in New Delhi and Apple BKC in Mumbai — it now plans to launch four more outlets, in Bengaluru, Pune, Mumbai, and Delhi-NCR.

 

With the new stores, Apple will be able to provide consumers with its famed retail experience, expose new users to its entire product lineup, and potentially get consumers to adopt the Apple ecosystem by cross-selling these products, say analysts.

 

“Apple wants to control the end-to-end experience for its users. They don’t just sell iPhones, they have a whole ecosystem of products. iPhone users, at some point in time, are expected to start buying iPads and Macs. In that case, retail outlets would be helpful,” said Pathak.

 

With its biggest competitor reassessing its growth strategy, analysts believe that the door is wide open for Apple to become the top dog in the premium segment and drive significant value. While the eventual pecking order in the smartphone market remains to be seen, for now, the winds continue to blow in favour of Apple.