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Apple Inc. (AAPL) iPhone Sales Fall 35%, Losing to Android in India

Apple Inc. (NASADAQ:AAPL)

Apple Inc. is not winning in the India smartphone market, which is being dominated by Android. Data released by Strategy Analytics reveal that iPhone sales in India fell 35% in the second quarter from a year earlier. The U.S. tech giant sold 800,000 iPhones compared to 1.2 million devices old in the same quarter a year ago. The iPhone maker views India as a very important market, the world’s third largest smartphone market after China and the U.S. Apple CEO Tim Cook recently made a long trip to India, where the company wants to open its retail stores.

Apple Inc (NSDAQ:AAPL) iPhone SE

Android Dominates Indian Market

The latest research from Strategy Analytics show that smartphone shipments grew 19% annually to reach 31 million units in India during the second quarter. Android maintained first position, holding a record 97% smartphone operating system (OS) market share in India.

Total smartphone shipments were 30.7 million in the second quarter, versus 25.8 million in the same quarter a year ago.

Rajeev Nair, senior analyst at Strategy Analytics, said that “India is growing quickly due to low smartphone penetration rates, an expanding middle class with more disposable income, and intense competition among major vendors, retailers and operators.”

Android maintained first position across India with a record 97% OS share for the quarter, up from 90% a year ago. A total of 29.8 million Android smartphones were shipped in the second quarter, up 28% annually from 23.2 million units in the same period last year.

“Android dominates the India smartphone market and looks unbeatable right now, due to its deep portfolio of hardware partners, extensive distribution channels, and a wide range of low-cost apps like Gmail,” stated Neil Mawston, executive director at Strategy Analytics.

Apple Inc. is losing in India, where iOS sales fell 35%, shipping 0.8 million devices in the second quarter. The company’s smartphone market share has halved to 2% from 4% in India during the past year.

The U.S. tech giant should “reduce iPhone pricing to cheaper levels, attract more operator subsidies and enlarge its retail presence through Apple stores or online channels if it wants to regrow significantly in the future,” Woody Oh, director at Strategy Analytics, said in a prepared statement.

Apple in India

Apple is worried about its stalled growth in its two top markets, the U.S. and China. The company has been facing problems in China, where its sales plunged 26% in its fiscal second quarter. The iPhone maker wants India to replace China.

As we reported, CEO Tim Cook made a long trip to India to learn more about the market. The company announced plans to build Maps for iOS, OS X and watchOS in in the country, and opened a new office in Hyderabad for its Maps program. The company is also planning to set up an app design and development center in the Bangalore.

Analysts already said that Apple will face a tough competition in India from Samsung and other mobile markers, whose smartphones are cheaper than iPhone.

Mizuho Securities said that India isn’t likely to compensate for the company’s slowing sales in China. The firm’s analysts said that India cannot replace China in the company’s revenue stream “due to lower wages, strong incumbents at very attractive price points, lack of carrier support and the political environment.”

India will only be able to support 4% to 5% of the company’s revenues. “That might not be enough to move the needle in the [near-term],” the analysts said.

Shares of Apple Inc. have dropped by 12.72% during the past 12 months.

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