Last August, when Finnish handset giant Nokia announced an array of new music-capable phones and an online music store (similar to iTunes), it was an acknowledgment of Apple’s growing presence.
A year later, the scene is hotting up. As Apple readies itself to launch the iPhone in the world’s second largest mobile market, India, analysts aver that Apple’s pricing - a well-guarded secret - is the key to snatching away the market share from Nokia.
| HOW THEY FARE Nokia Apple |
Consider this: Nokia sells a phone somewhere on this planet every 18 seconds and has 9,200 applications written for its phones. However, the smartphone segment, in which Apple will be competing, is estimated to be less than 5 per cent of the total handset market and is dominated by Nokia globally and in India too.
While last year, around 97 million handsets were sold, the smartphone segment accounted for around 5 million handsets, according to Anshul Gupta, principal research analyst, Gartner.
This year the figure is expected to rise to around 7 million. In the Asia-Pacific region, Nokia has a slightly over 82 per cent of the market share in the smartphone category. It’s estimated that the India figures hover around this number. The other competitors are way below — Research in Motion (Blackberry), HTC, Samsung, LG, Motorola and Ericsson.
Various estimates peg the iPhone pricing between Rs 28,000 (for 8 gb) and Rs 36,000 (for 16 gb). Reports also suggest that the iPhone may not be subsidised by Indian carriers as done in the US. Analysts note that the change in Apple’s business model for the 3G iPhone was driven by the large grey market for iPhones.
Update on Aug.21: The 8GB iPhone 3G is being priced at Rs 31,000 while the 16GB handset will be available for Rs 31,600.
It is believed that more than 1.3 million, or about a quarter of the first-generation iPhones sold, have been “unlocked” — i.e., altered to run on networks other than those chosen exclusively by Apple. India is estimated to have a significant share of “unlocked” iPhones. A high pricing strategy will queer the pitch for Apple, note analysts.
“It will be interesting to see at what price the Apple iPhone launches in India. If priced competitively, it could garner a significant market share in the smartphone segment. Given its performance abroad, we believe it will generate a good response,” says Gupta. The experience from some other markets also suggests that the entry of the iPhone has had a benign effect by increasing market awareness for the smartphone category, suggests Alok Shende, principal analyst, Accendia Consulting. “This, together with increased competition, has not only benefitted iPhone sales, but also that of its nearest competitors,” he says.
Apple has publicly stated that it aims to sell 10 million iPhones in 2008. Both Vodafone and Airtel will be launching the iPhone on August 22 and experts expect Apple to sell slightly over 8,000 iPhones in the next one year. It’s estimated that RIM sells around 6,000 Blackberries every month.
In the enterprise space, the smartphone category is dominated by RIM, which is the de facto standard for C-Level executives. The other competitors include Nokia, HTC and Motorola. Apple may face a major cost hurdle if priced above the competitors’ prices.
Despite rising doubts over continuous growth of mobile data in Asia, the introduction of the most talked-about gadget globally (the iPhone) will become a major catalyst to finally drive growth of data in Asia beyond SMS, indicate Credit Suisse analysts. The iPhone or similarly-equipped iPhone-like handsets could trigger growth of full browsing and wireless data in the region.
Nokia, on its part, is an acknowledged manufacturer, distributor and marketer of hardware, but it is said to face software problems (where Apple scores). Apple has sold more than 7 million iPhones in just over a year, and $30 million in programs from its App store in the first month it was open.
It also scores on the user interface front. Its browsing capabilities, too, are vouched for. More than 80 per cent of iPhone owners use its Web browser, compared with 60 per cent for Nokia’s N95, according to market tracker M:Metrics. The iPhone is used more often for social networking, maps, applications and listening to music. The N95’s only edge was in watching video.
But then, handset vendors will attempt to come up with an iPhone “killer” in the consumer segment. iPhone would face the heat with competitors such as Nokia N95, N96, Samsung’s Instinct and Touch Diamond from HTC. Besides, Nokia has said it will start selling a touch-sensitive handset by the year-end. The device, reportedly code-named Tube, promises a new challenge to Apple. But then, argue experts, Apple’s sales come more from a fan following.
