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More than four years after it started selling iPhones in India, Apple is aggressively pushing the devices with installment payment plans that make it more affordable, a new distribution model and a marketing blitz.

“Now your dream phone” at 5,056 rupees, or $94, read a recent full front-page ad for the iPhone 5 in the Times of India, referring to the initial payment on a phone priced at about 45,500 rupees, or almost two months’ wages for an entry-level software engineer.

The newfound interest in India suggests a subtle strategy shift for Apple, which has moved tentatively in emerging markets and has allowed rivals like BlackBerry and Samsung Electronics to dominate with more affordable smartphones. With the exception of China, all Apple stores are in advanced economies.

Apple expanded its Indian sales effort in the second half of 2012 by adding two distributors. Previously it had sold iPhones only through a few carriers and stores it calls premium resellers.

The result: Shipments of iPhones to India between October and December nearly tripled to 250,000 units, from 90,000 in the previous quarter, according to an estimate by Jessica Kwee, a Singapore-based analyst at the consulting firm Canalys.

At the MobileStore, an Indian chain owned by the Essar conglomerate, which says it sells 15 percent of the iPhones purchased in the country, iPhone sales tripled between December and January, thanks to a monthly payment program introduced last month.

“Most people in India can’t afford a dollar-priced phone when the salaries in India are rupee salaries,” said Himanshu Chakrawarti, the MobileStore’s chief executive. “But the desire is the same.”

Apple, its distributors, its retailers and banks share the advertising and interest costs of the marketing push, according to Mr. Chakrawarti. Carriers like Bharti Airtel, which also sell the iPhone 5, run separate ads.

India is the world’s second-largest cellphone market by number of users, but most Indians cannot afford fancy handsets. Smartphones account for just a tenth of total phone sales. In India, 95 percent of cellphone users have prepaid accounts without fixed contracts. Unlike those in the United States, Indian carriers do not subsidize handsets.

Within the smartphone segment, Apple’s Indian market share last quarter was just 5 percent, according to Canalys, meaning its overall penetration is tiny.

Still, the industry research company IDC expects the Indian smartphone market to grow more than five times, to 108 million units in 2016, from about 19 million last year, which presents a big opportunity.

Samsung Electronics dominates Indian smartphone sales with a 40 percent share, thanks to its wide portfolio of Android devices, priced as low as 5,900 rupees. The market has also been flooded with lower-cost Android phones from local brands like Lava and Micromax.

Most smartphones sold in India are much cheaper than the iPhone, said Anshul Gupta, a Gartner analyst: “Where the masses are — there, Apple still has a gap.”

Apple helped create the smartphone industry with the iPhone in 2007, but last year it lost its lead globally to Samsung, whose free Android software is especially attractive in Asia. Many in Silicon Valley and on Wall Street believe the surest way to penetrate lower-income Asian markets would be with a lower-cost iPhone, as has been widely reported but never confirmed. The risk is that a lower-cost iPhone would reduce demand for the premium version and eat into Apple’s margins.

The new monthly payment plan in India goes a long way toward expanding the potential market, Mr. Chakrawarti said.

“The Apple campaign is not meant for, really, the regular top-end customer; it is meant to upgrade the 10,000-12,000 handset guy to 45,000 rupees,” he said.

Apple’s main focus for expansion in Asia has been Greater China, including Hong Kong, mainland China and Taiwan, where revenue grew 60 percent last quarter to $7.3 billion.

Asked last year why Apple had not been as successful in India, Timothy D. Cook, the company’s chief executive, said that its business in India was growing but that the company remained more focused on other markets.

“I love India, but I believe that Apple has some higher potential in the intermediate term in some other countries,” Mr. Cook said. “The multilayer distribution there really adds to the cost of getting products to market.”

Apple, which has partly addressed that situation by adding distributors, did not respond to an e-mail seeking comment.

Ingram Micro, one of its new distributors, also declined to comment. Executives at Redington, the other distributor, could not immediately be reached.

BlackBerry, which has seen its global market share shrivel to 3.4 percent from 20 percent over the past three years, is making what is seen as a last-ditch effort to save itself with the BB10 series.

The high-end BlackBerry Z10, introduced in India on Monday, is expected to be priced not far from the 45,500-rupee price tag for an iPhone 5 with 16 gigabytes of memory. The Samsung Galaxy S3 and Galaxy Note 2, the Nokia Lumia 920 and two HTC models are the main iPhone rivals.

Until last year, BlackBerry had a market share of more than 10 percent in India, thanks to a push into the consumer segment with lower-priced phones. Last quarter, its share fell to about 5 percent, according to Canalys, just ahead of Apple.

Article source: http://www.nytimes.com/2013/02/26/business/global/smartphones-gain-ground-in-india.html?partner=rss&emc=rss

SHANGHAI — A Chinese environmental group has singled out Apple for criticism, accusing the company’s Chinese suppliers of discharging polluted waste and toxic metals into surrounding communities and threatening public health.

The group, the Institute of Public and Environmental Affairs in Beijing, released a 46-page report Wednesday documenting what it said was pollution from the dozens of “suspected” Apple suppliers throughout China.

The report, which the group said was based on visits to many of the factories’ regions, said that factories that the group suspected were Apple suppliers often “fail to properly dispose of hazardous waste” and that 27 of the suppliers had been found to have environmental problems.

An Apple spokesman said Wednesday that the company had been aggressively monitoring factories in its supply chain with regular audits.

“Apple is committed to driving the highest standards of social responsibility throughout our supply chain,” said Steve Dowling, a spokesman for Apple, which is based in Cupertino, Calif.

He added: “We require that our supplier provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes wherever Apple products are made.”

Apple’s products have grown hugely popular in China, which already has the world’s busiest Apple stores. But the company has also been dogged by challenges here, though Apple does not typically disclose its list of suppliers.

Last year, one of Apple’s biggest suppliers was hit by a wave of worker suicides at several of its mainland Chinese facilities. And in May, an explosion and fire at a plant that made Apple products killed two people and injured more than a dozen in the city of Chengdu, in southwest China.

Also earlier this year, Apple acknowledged that 137 workers at a Chinese factory near the city of Suzhou had been seriously injured by a toxic chemical used in making the signature slick glass screens of the iPhone.

But Apple is hardly the only company facing criticism over its Chinese supply chain. In recent years, dozens of multinationals have been accused of using Chinese factories that employed child labor, violated the country’s labor laws and fouled its waterways.

Supply chain experts say brand-name companies generally do a better job of monitoring and auditing their suppliers than smaller companies in China.

But most experts agree that while conditions have improved at many work sites, labor violations and the discharge of toxic waste remain major problems.

Apple said it carried out its own regular audits of supplier factories. It issues a report each year detailing problems it faced and explaining its monitoring practices and how it induces suppliers to correct violations within 90 days.

In many cases, Apple says that its audits are the first conducted by any company on the facilities, and that many of those involve environmental audits.

But Ma Jun, the director of the Institute of Public and Environmental Affairs, said Thursday that Apple had a poor environmental record and that the company had been less responsive to the group’s investigations than other electronics makers.

(Mr. Ma did say, however, that Apple had agreed to discuss the latest report.)

A similar report on Apple was issued by his group last January.

“Apple has made this commitment that it’s a green company,” Mr. Ma said by telephone Thursday. “So how do you fulfill your commitment if you don’t consider you have responsibility in your suppliers’ pollution?”

Gu Huini contributed research.

Article source: http://www.nytimes.com/2011/09/02/technology/apple-suppliers-causing-environmental-problems-chinese-group-says.html?partner=rss&emc=rss

Inside Asia: Smartphones Gain Ground in India

Group Criticizes Apple’s Environmental Record in China

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