One market Apple has ignored for a while is India, but that quickly changed last week when company launched the iTunes Store there and in more than 50 other new countries. With over a billion people, it is the second largest country by population in the world. Why is this a big deal? Let’s take a look.
iTunes offers Indian tracks for $0.16 – 0.27 USD (rupees 7 – 15), albums from $1.2 USD (rupees 70) and movies from $5.3 – $9 USD (rupees 290-490). Movies are also offered for rental at rupees 80 (for Bollywood and other Indian titles) or rupees 120 for international films, which are valid for 30 days. Sure it is cheap, but there is a bigger picture to this. It shows that India has influenced such prices. The company could have decided to go with a similar pricing model as in the US, but doing so would have been disastrous. Instead, Apple took the time to understand the market and chose prices that are relevant to the local economy and purchasing capabilities of the 150 million internet users – a very smart move.
Also, this pricing takes on local film labels and music services such as Flyte, Gaana.com, Dhingana, and Saavn head on. iTunes could change the ball game by capturing a fair share of that market and gain larger international presence. In addition, offering a digital store takes on online piracy in the country by providing customers an easy way to obtain content. It also creates another source of digital revenue for local film and music studios. A recent report by FICCI (Federation of Indian Chambers of Commerce and Industry) stated that the Indian music industry grew to $167 million (rupees 9 billion) in 2011 (with digital revenues of 5.2 billion), which is a five percent growth over 2010. The opportunity for iTunes is enormous.
India has an estimated 150 million internet users with over 900 million mobile users, making it the second largest market in the world after China. By offering iTunes, Apple has not only expanded the store’s growth significantly, but also demand for its products. The effect of this won’t be seen overnight, but will be made apparent in the long run. Before last week, owners of the company’s products in the country had to figure out a workaround to obtain content via the iTunes US store. It was a mess and owners were never able to receive the full Apple ecosystem experience. Until now, owning any other smartphone in India was no different from an Apple product due to lack of the ecosystem. Now that a polished experience is offered, brand presence and loyalty will increase. Microsoft, Nokia, and Google got beat by Apple offering a solid ecosystem here. I believe the company will start catering to Indian users by offering a more personalized experience and local targeted ads. Something Apple is already doing with the Chinese market.
Former growth avenues are already nearly exhausted by Apple, so the next real growth for the company will occur in untapped countries with rapidly growing mobile-internet market. With people accessing content via all sorts of devices from phones to tablets. Apple’s already seeing significant customer traction in China, India’s next. In fact, Indian carriers are already seeing 1,300 new iPhones being added to their networks on a daily basis.
I find it intriguing that the launch of iTunes in 50+ countries occurred just a month before the year-end. With the latest roll out, Apple is creating a pathway for entering the TV market big time. By creating a strong presence with film and movie studios all around the world, the company is eliminating hurdles for the space Apple plans to take on next.
Even though Apple doesn’t use similar tactics as they do in the US, the company is using backdoors like iTunes to create a strong presence among the fastest growing markets in the world.