India Faces iPhone 5 Shortage

By Jayanth Sugavasi

Just days after the iPhone 5 went on sale in India, most retailers are already out of stock.

“We were sold out within 24 hours of launch. It’s all gone,” said Himanshu Chakrawarti, chief executive of The MobileStore Ltd., a retailer that stocks iPhones and which has 900 outlets across India. Apple Inc.’s latest iPhone officially launched in India on Friday, more than a month after it hit major markets elsewhere.

About 10,000-15,000 units were shipped to India for the first round of sales after the launch, a person familiar with the matter told India Real Time. Overall, specialized distribution companies and mobile phone companies have together placed orders with the Cupertino, Calif. company to ship 100,000 iPhone 5 units to India to be sold in the first month, according to analysts.

Apple’s service-provider partners in India and local mobile phone retailers are hoping fresh stock will be available for sale by the end of the week. In the meantime, they are taking early bookings for the next round of sales.

So far, the iPhone 5 has done much better than earlier iPhone models. Around 200,000 iPhones are expected to be shipped to India by the end of December, said Rachel Lashford, managing director for mobile at Singapore-based research firm Canalys, which closely tracks handset sales. By comparison, between April and June, Apple had shipped fewer than 50,000 earlier iPhone models to India, according to Canalys.

A key reason why the number of units shipped to India has increased has to do with an improved distribution system. The company recently tweaked its sales strategy for India by tying up with specialized distribution companies such as Ingram Micro Inc and Redington India Ltd.

Before this, Apple sold the iPhone only through Indian telecom providers, which bundled the phones with data services. This meant that independent mobile phone retailers like the MobileStore previously had to go through service providers in order to stock the iPhone.

Mr. Chakrawarti said the earlier distribution model of Apple was “inefficient,” saying wireless operators were unaccustomed to dealing with mobile phone retailers. Specialized distributors like Ingram and Redington, on the other hand, understand the mobile handset market better and are faster at responding to market demand, he argues.

The faulty distribution strategy was one of the reasons why Apple’s share of the smartphone market in India was below 2% in April-June, when rival South Korea’s Samsung Electronics Co. held a more than 50% share in the country, according to research firm IDC Inc.

Ms. Lashford said that, on top of an improved distribution network, the upcoming festival season and a drop in price of older models will also help boost iPhone sales in India. The iPhone 5 launch comes just a few days before the Hindu festival of Diwali, which this year falls on Nov. 13. This is traditionally considered an auspicious time to make purchases.

“We are stocked out within the first couple of days of the launch,” said a spokesman for Aircel Ltd., one of two service provider partners for Apple in India.

A spokesman for Bharti Airtel , another telecom provider that partnered with Apple to distribute iPhones, said the company saw a 78% jump in preorders for iPhone 5s compared with the previous version of iPhone. He added that Bharti Airtel saw a spike in pre-orders from non-resident Indians looking to gift the smartphones to their friends and family in India for Diwali. The pre-bookings started three days ahead of the Friday launch.

Satish Babu, founder and managing director of Chennai-based UniverCell, which runs 450 retail outlets in southern India, says his company sold all the 1,000 iPhone 5 units it had within two days. The retailer is now taking pre-bookings for the next round of sales.

The iPhone 5 is priced at 45,500 rupees ($833) for the basic 16-gigabyte version. The 32-gigabyte model is priced at 52,500 rupees and the 64- gigabyte version at 59,500 rupees.