Apple’s India love affair is falling apart with sales dropping by a one-fourth with fans moving to Chinese competitors for their next smartphone.

“Apple iPhone volumes are set to drop by as much as 25 per cent this fiscal as the new iPhones are exorbitantly priced while the old ones are still being sold without enough discounts,” Neil Shah, research director at Counterpoint Research, told BusinessLine .

Counterpoint estimates Apple will be able to sell only 2-2.3 million iPhones this calendar year compared with over three million last year. This would be the first drop in iPhone sales in four years.

In terms of revenues, Counterpoint Research estimates that if Apple is able to sell high value models such as iPhone X, XS or XR in the current quarter, it may end the year flat but that’ll remain a challenge.

In favour of Android

“Even in the annual e-commerce sales this year, iPhones didn’t sell well. The market is rapidly shifting in favour of Samsung and OnePlus for higher value phones. Apple will face a tough time trying to avoid a drop in iPhone revenues this year,” said Shah.

The biggest reason for the drop is Apple’s change in India strategy. While the iPhone maker was seen heavily discounting its older models last year to penetrate a market with high latent demand for the Apple brand, earlier this year, Apple took a U-turn in favour of maintaining a premium brand image.

The company consolidated its distributors, cut down on offers and kept the price of the newly launched iPhones at about 40 per cent higher than last year’s flagship device, the iPhone X.

Weak rupee

Currency weakness is a part of the challenge but the bigger issue is Apple’s resistance to start local manufacturing, except for just one old model, to get tax advantage.

Since nearly every iPhone sold in India is imported from the US, it attracts 20 per cent duty as compared to 10 per cent last year. Apart from Apple, every other smartphone maker manufactures phones in India.

According to analysts, iPhone sales in the quarter ended September 30 fell by half, to 450,000 units in India compared with 900,000 units last year. This also led to the company’s marketshare drop by more than half to just about 1 per cent.

The upcoming quarter is not likely to offer any respite for Apple. While typically third and fourth quarters are the best quarters for Apple’s iPhone sales, this festival season has showered its blessings on Chinese smartphone makers instead of the iconic Apple brand.

“Typically Q4 (October-December) is the best quarter for Apple in India. Last year, they sold about 1.1 million units but this year, we expect them to sell at best 750,000 units in Q4,” said Shah.

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