New Delhi: India smartphone market continues to be hard nut to crack for Apple. Despite several price cuts and discounts on older iPhones, Apple’s revenue and net profit has fallen to ₹10,538 crores and 262 crores in 2018-19, for the first time in several years, according to the regulatory filings by Apple to the Registrar of Companies, as reported by ET.

Apple’s revenue from operations and net profit in 2017-18 was ₹13,049 crore and ₹896 crore, respectively, while in the year before (2016-17), it was ₹11,618 crore and ₹373 crore, respectively. Apple is yet to issue an official statement to the press on the matter.

“The slump in Apple’s India revenues in FY 2019 is not surprising, and can be attributed to the tough market conditions it faced last year, including weakened rupee and higher import duties, as well as the muted consumer sentiments owing to high iPhone prices," points out Prabhu Ram, Head, Industry Intelligence Group at CMR.

The demand for iPhones had also plummeted as the competition in the premium segment has heated up with OnePlus offering high end smartphones with comparable and sometimes even better design and features. For instance, the OnePlus 7 Pro offers a bezel less 6.67-inch OLED screen unlike the iPhone XS Max that was still sporting a large notch at the top. The fact that users were getting the premium experience for ₹48,999, also worked against Apple, as its high-end smartphones like iPhone XS Max cost over 1 lakh. Apple did launch the iPhone XR for emerging markets, but even that at ₹76,900 was beyond the budget of many buyers. But compared to higher variants, the iPhone XR was huge compromise in terms of camera and display performance.

Apple’s inability to offer cutting edge features and technology on its new iPhones has also marred its fan following, many of them are moving to Android camp for the flexibility, stunning design and variety they offer. Reports of vulnerability and attacks on iOS have also made many loyalists sceptical. A September 2019 report, by Kaspersky claims phishing attacks on Mac computers, iPhones and associated web services went up by 9% since 2018.

According to a July 2019 survey involving 38,000 smartphone users by BankMyCell, iPhone retention rate has fallen by 15.2% in last one year, while 26% of users switching from an iPhone X moved to another smartphone brand. Only 7.7% of Samsung users switched to an iPhone.

Though Apple had a tough year, the company might be heading for a promising year ahead. An October 2019 report by Counterpoint points out that Apple is back in the top ten smartphone vendors list, riding on price cuts and big discounts on Apple XR and the launch of new iPhone 11 ahead of the festive season.

Following the relaxation of the government policy on mandatory sourcing from local markets which required all SBRT (single brand retail trade) entities to procure 30% of goods from India, Apple is reportedly planning to open 2-3 retail stores in India and the first one of them are likely to open by 2020 in Mumbai. This will further cement Apple’s position in the India market and will let users experience and understand its products better. Apple has also started the assembly of iPhone XR in India at Foxconn’s Chennai plant.

CMR’s Ram believes, “Apple is on a firmer footing now going forward, and its FY20 performance will reflect that, owing to a more prudent pricing strategy with the iPhone 11 series, more enhanced local production, more local R&D, as well as a potentially stronger retail presence in the near future."

Tarun Pathak, Research Director at Counterpoint Research agrees that Apple revenue is expected to grow in next fiscal and adds, the older series didnt pick up because of pricing and lack of local assembling. It is only after after XR price cut in Q2 2019 that the sales started picking up and will be reflected in next fiscal (which will be good). Additionally, iPhone 11 is doing good and revised channel strategy is finally working for Apple.

Apple’s investor call where the company will announce its financial results for September quarter is scheduled on October 30.

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