Once A Tough Market For Apple Inc., Indians Show A Growing Taste For iPhones

India is one of the fastest-growing smartphone markets in the world, but it's been a tough one for Apple Inc. Only one in five Indians owns a smartphone, and since wireless carriers don't typically subsidize phones, Apple products are too costly for any but the most affluent early adopters.

Apple has made some inroads, however, by selling a wide range of phones from the iPhone 6 to the iPhone 4S and dropping prices through deals with banks and wireless carriers. “The reception to the iPhone 6 models has been tremendous. It has given (Apple) huge momentum in India,” Tarun Pathak, a senior analyst at Hong Kong-based Counterpoint Technology Market Research, told International Business Times.

Apple sold nearly half a million iPhones in the last quarter of calendar year 2014, the research firm estimates. This figure includes sales of earlier models such as the iPhone 5S and 4S, which are still available in India. That is part of the secret to Apple’s growing success in the Asia-Pacific’s fastest-growing smartphone market.

Apple, which reports its fiscal first-quarter earnings after market close Tuesday, hit the million-units-a-year milestone for the first time in India in the 12 months ended Sept. 30, moving about 1.1 million units, Counterpoint estimates. That rate of growth jumped following the launch of its iPhone 6 and 6 Plus models.

In addition to slowly expanding the reach of its distribution in the country, through pan-India deals with major distributors, Apple has lifted its volume with sales of older models at much lower prices, buyback and exchange schemes and monthly installment offers via various banks and retailers.

For instance, the 16Gb version of an iPhone 5S had dropped lower than 35,000 rupees (about $570) leading up to the October launch of the iPhone 6. The handset, which was introduced in India in December 2013 at a price of 53,500 rupees, was selling at around 37,500 rupees on the Indian online shopping site Flipkart.com as well as on Amazon.com’s Indian site.

Counterpoint estimates the 16Gb version of the iPhone 5s accounted for close to 46 percent of iPhone volume in India in the previous year.

The fast-growing Indian market has attracted Chinese upstart Xiaomi Inc., which will launch its flagship Mi4 in India on Wednesday.

For many Indians, though, an Apple, even an older one, is the phone to own, and only its high cost had made it prohibitive in a market where carriers don’t subsidize handsets and buyers usually pay the full cost of the handsets upfront.

Over the last 18 months, especially, Apple has found ways to help people get around that problem, without going down the route of making a cheaper handset specific to this market -- unlike Samsung Electronics Co. Ltd., which has a play across the price spectrum.

“We expect that the next big impetus will come from heavy investment in the distribution channels, opening more retail outlets, having more distribution partners and spending more marketing dollars,” said Jayanth Kolla, a partner with Convergence Catalyst, a telecom consultancy in India.

Apple has struck a deal with Brightstar Corp. to distribute its phones in India, the Times of India reported Tuesday, citing industry sources. Brightstar, controlled by Japanese telecom giant SoftBank Corp., already distributes Apple products in other markets.

Apple is adding other distribution partnerships in India, Counterpoint’s Pathak said, such as the one with Rashi Peripherals Pvt. Ltd., which coincided with the launch of the iPhone 6. This deal expanded Apple’s reach in India by some 1,200 stores.

Earlier this month, Apple stepped up its efforts by offering its latest model, the iPhone 6, on an installment plan in a partnership with Vodafone Group PLC. The plan locks customers in for two years, but they get a brand new iPhone 6 and full-fledged plan for 3,599 rupees a month with no down payment.

“Apple has a great opportunity to lock more and more people into their ecosystem,” Pathak said.