Inside Asia: Smartphones Gain Ground in India

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.

India Police Arrest Student Over Facebook Post

Shaheen Dhada, 21, a medical student who lives on the outskirts of Mumbai, was a bit annoyed. Like most people, she understood what was happening: Mr. Thackeray’s hard-line Shiv Sena party has dominated Mumbai for decades, often using intimidation, violence or vandalism to enforce citywide strikes or bans against certain movies. This time, Shiv Sena wanted a citywide signal of deference and respect for Mr. Thackeray.

Ms. Dhada decided to post a mild message of protest on her Facebook page.

Why, she asked, should an entire city be involuntarily shuttered to mark the death of a politician? Her friend, Renu Srinivasan, 20, read the post and hit “like.”

The post went up on Sunday. Within hours, a Shiv Sena official had complained to the police, who notified Ms. Dhada’s family. Intimidated, she quickly posted an apology and closed her Facebook account, her lawyer said. But by Monday, Ms. Dhada and Ms. Srinivasan had been arrested and charged with engaging in speech that was offensive and hateful — for a post that many experts say was neither.

India is often regarded as one of the world’s most freewheeling democracies, where citizens are forever voicing their opinions or participating in political protests. But the Facebook arrests have spiraled into a national controversy about the limits on free speech, the broad discretion granted to the authorities to curb online commentary and the professionalism of an Indian police force often beholden to political parties.

“We have bad laws when it comes to regulation of speech,” said Pranesh Prakash, policy director of the Center for Internet and Society in Bangalore. “Some types of speech are illegal online even though they are perfectly legal in print or other media.”

For many of Ms. Dhada’s supporters, the case reeks of systemic hypocrisy.

When the police received the complaint from a local Shiv Sena chief on Sunday evening, officers acted rapidly, calling Ms. Dhada’s uncle, a physician, and demanding that his niece apologize. In the complaint, Ms. Dhada’s lawyer said, Shiv Sena declared that the post by Ms. Dhada — a Muslim — had disrespected the Hindu religion as well as Mr. Thackeray, whom Shiv Sena regarded as a Hindu god.

Yet less than an hour after the complaint was filed, Shiv Sena supporters vandalized an orthopedic hospital owned by Ms. Dhada’s uncle, who later filed a police complaint. “A mob of 400 or 500 persons ransacked the hospital,” said Sudhir Gupta, the lawyer for Ms. Dhada. “The police failed to protect the hospital.”

Social media have served as a primary channel of criticism about Ms. Dhada’s arrest, with tens of thousands of comments made on Twitter and Facebook. Much of the criticism voiced online and by legal experts has focused on the Information Technology Act of 2008. The law was overhauled after the November 2008 terrorist attacks in Mumbai to grant the government broader powers to combat cybercrime, among other things.

Yet many critics and legal experts argue that politicians, in some cases, are using the broad language to stifle dissent. This month, a man in southern India, writing on Twitter, suggested that the son of India’s finance minister had amassed huge wealth through corruption. The minister’s son filed a complaint with the local police, who quickly arrested the author of the Twitter comment.

“The law is so broad, it gives unbridled power to the authorities to register a case,” said Pavan Duggal, a lawyer who practices before India’s Supreme Court and specializes in Internet law. “It leaves everything to the subjective discretion of the law enforcement authorities.”

In her Facebook post, Ms. Dhada questioned the public frenzy over Mr. Thackeray’s death and noted that, by comparison, several of the freedom fighters of India’s independence movement have mostly been forgotten.

“With all respect,” she began, according to a transcription in The Hindu, a leading national newspaper, “every day, thousands of people die, but still the world moves on. Just due to one politician died a natural death, everyone just goes bonkers. They should know, we are resilient by force, not by choice. When was the last time, did anyone showed some respect or even a two-minute silence for Shaheed Bhagat Singh, Azad, Sukhdev or any of the people because of whom we are free-living Indians?

“Respect is earned, given, and definitely not forced,” she concluded. “Today, Mumbai shuts down due to fear, not due to respect.”

Mr. Thackeray, who died Saturday at age 86, left a controversial legacy. He once spoke admiringly of Hitler and won power in Mumbai by playing to the grievances of the local Marathi population, while disparaging outsiders. His Shiv Sena cadres were often toughs and roughnecks; an official inquiry blamed Mr. Thackeray and his supporters for provoking riots that broke out in 1992 and led to the deaths of about 1,000 people, most of them Muslims. No official action was ever taken against him.

His funeral rites and public cremation ceremony were attended by tens of thousands of people, including movie stars and some of the country’s leading politicians. While some Indian newspapers carried critical commentaries of Mr. Thackeray’s career, much of the nonstop weekend coverage on India’s television news channels was far tamer, in some cases adulatory. Even former political enemies, perhaps not wishing to speak ill of the dead, offered praise.

As for Ms. Dhada and Ms. Srinivasan, they were released on bail on Monday. The case has stirred so much condemnation that the top police official in Mumbai ordered an investigation into the arrests.

For now, though, the two young women must await their first hearings in court.

Niharika Mandhana, Sruthi Gottipati and Hari Kumar contributed reporting.