Case Presentation

“Apple iPhone in India”

Muhammad Ammar Ashraf

Muhammad Hasan

Muhammad Idrees

Raja Imran Arshad

Hassan Adil

AGENDA:

•Introduction to iPhone

•Emerging Markets and their Assessment

•Telecom Industry In India

•Apple Launch in India

•Issues and Recommendations

INTRODUCTION TO IPHONE

CELLULAR PHONE INDUSTRY

• Very fast technology development• Emergence of Smart phones

Worldwide Handset Market Share (2007)

Nokia 38.98%

Samsung 14.39%

Motorola 14.2%

Sony Ericsson 9.24%

LG 7.19%

LAUNCH OF IPHONE

• Apple iPhone is a revolutionary and magical product that is literally five years ahead of any other mobile phone - Steve Jobs

• Cutting-edge technology. Much superior in terms of touch aspect and software support

IPHONE

• Combination of a Smartphone and a multimedia device

• First Mover: New hardware-software interface based on a large multi-touch display

• 3 in 1 Benefit – Phone, Internet, iPod

• Patented keyboard technology, called ‘multi-touch'

• Far superior in terms of integration of hardware and software

• First device to support visual voicemails

• Best invention of the year 2007

• Trendsetter

IPHONE

IPHONE 3G

• Twice as fast at half the price.• Automatically switching between different networks such

as Wi-Fi, 3G and EDGE• Supports Microsoft Exchange ActiveSync• iPhone SDK

IPHONE 3GS

• “S” stands for speed• Improvement in many features over its previous models

A WHOLE NEW WORLD TO COME…

• A report by HMS Wireless: “Everyday one million new customers are added to the mobile phone markets”

• 85% of them are only from the middle classes in the emerging economies

• Apple has to face stiff challenges in emerging economies

MNCS’ ENTERING THE EMERGING MARKETS

CRITICAL DILEMMAS

• Think & Plan whether They should enter the new and emerging markets

• Which markets should they enter

• What should be their entry strategy

• How to form and nurture the relationship with local partners

ASSESSMENT & PLANNING OF ENTRY STRATEGY

John T Horn, a consultant at McKinsey Washington

explains, “ what makes market entrants successful: (they are the) factors such as timing, sales relative to the competition and the ability to leverage complementary assets.”

EXHIBIT (V)

A thoughtful analysis and understanding of these four key areas have helped MNCs to foray into new markets

EXHIBIT (V)

THE PATHS TO NEW MARKETS

PREDICTORS OF SUCCESSFUL MARKET ENTRY

• Size of entry relative to minimum efficient scale

• Relatedness of the market entered

• Complementary assets

• Order of entry

• Industry life cycle stage

• Degree of technological innovation

TELECOM INDUSTRY IN INDIA

TECHNOLOGICAL DEVELOPMENTS

Technology

Fixed line GSM CDMA VoIP Broadband 3G/WiMax

           

1947 1992 2001 2002 2003 2007

INDIA’S MOBILE SUBSCRIBER GROWTH

2000 2001 2002 2003 2004 2005 2006 2007

3.1 5.05 10.522

37.4

58.5

105.4

180

0 0 0.8 6.4 10.919.1

44.2

85

GSM CDMA

Note: Data is in millions

GROWTH RATE OF WIRELESS SUBSCRIBER BASE

Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 -

13

33.69

52.22

96.77

165.11

184.92

Subscribers in Millions

Subscribers in Millions

MARKET SHARE IN JUNE 2008

Nokia; 59.5

Sony; 8.1

Samsung; 7

Motorola; 5.9

Others; 19.5

Sales

NokiaSonySamsungMotorolaOthers

APPLE’S MARKET ENTRY STRATEGY

-- Successful Business Models & Product attributes??? -- Were Marketers, Superior Marketers???

-- Distribution System?

-- New Capabilities…….. - Joint Ventures - Licensing - Contractual approach

ENTRY STRATEGY

Apple’s Market Strategy For India :

Apple tied up with two Indian companies to introduce iPhone -- Bharati AirTel. -- Vodafone.

This venture was made to understand Indian market better and to gain benefit of the experience of Indian telecom business that these companies already have

ENTRY STRATEGY

Manoj kholi (CEO AirTel):

“… We are delighted to bring new innovative iPhone to India as we have always stood for innovation & customer delight ...“

Tim Cook (Apple’s COO):

“… We are thrilled to work with Bharati AirTel company, India’s leading Integrated Telecom company to bring iPhone to millions of Indian mobile users…”

ENTRY STRATEGY

Harish Bijoor (CEO Harish Bijoor Consultants & Business Strategy Analyst):

“…Apple is all set to enter Indian Market with it’s iPhone which will be offered by two players Vodafone & AirTel. What's the impact of such a move…”

Important facts:

-- Number Portability still not available.-- Grey channel Issue-- Who will be the real beneficiary, iPhone TSP’s or iPhone alone??

ENTRY STRATEGY

-- Being a blockbuster in US, Apple assumed iPhone to rock the Indian market

-- Its launch date and price was never announced, leading to speculations

-- No high intensity promotional campaign by Apple

-- Depended on word of mouth campaign ignoring 3 P’s

-- Apple as a company did not appeared in media, instead media relied statements from Vodafone & AirTel

IPHONE LAUNCH: ASSUMPTIONS & STRATEGY

-- Finally 22nd June, 2008 iPhone 3G was launched skipping 2.5G ignoring the infrastructure constraints

-- Price being INR 31,000 for 8GB & INR 36,100 much greater than $199 (INR 1,000) almost four times than in US

-- No subsidies were given by Vodafone or AirTel

On above of all that, iPhone was launched at midnight of 22st June, 2008

IPHONE LAUNCH: ASSUMPTIONS & STRATEGY

REASONS & RECOMMENDATIONS

REASONS FOR FAILURE

• Lock in Contract was not preferred

• Lack of expertise in selling handsets

• Non-availability of 3G in India

• Limited Accessibility

• Weak association with Indian consumer

• Minimum spending on VAS

• Lack of Promotion & Advertising

• Pricing Communication

• Low price of iPhone in Grey Market

RECOMMENDATIONS

• Market Potential should be fully capitalized

• Understanding Customers needs & value requirements

• Positioning with local values and norms (consumer

insights)

• Win Customer Confidence

• Implementation of IMC

• Effective Distribution System

• Influence government policies about Grey Market and

use of transmission codes

Thank You!!