Is India getting Apple fever?November 6, 2012: 10:34 AM ET
With models, starlets and disco music, the iPhone 5 makes a splash on the subcontinent
FORTUNE -- "Nowhere in India will you see this kind of queue to buy a smartphone." -- TV reporter, Mumbai, Nov. 2
India may be the fastest-growing mobile phone market in the world, but it's been hostile territory for Apple (AAPL).
In a country of 1.2 billion that buys 15 million cell phones a month, Samsung commanded a 51% share of the smartphone market in Q2, according to IDC, while the iPhone's share shrank to 1.2% -- half of what it was the year before.
Which is what made Friday's launch of the iPhone 5 in India so surprising. At elaborately staged events in New Delhi, Mumbai and Bangalore -- complete with models, starlets and disco music -- buyers queued up hours in advance, a sight unusual enough there to be considered newsworthy. (See videos, below.)
Apple faces special challenges in India, where customers prefer their cell phones post-paid -- i.e. without carrier subsidies -- and inexpensive. Seventy percent of the mobiles sold in the country cost less than $100, which makes selling unsubsidized iPhones -- the iPhone 5 starts at 45,500 rupees ($845) -- especially daunting. Moreover, because local regulations prevent Apple from opening its own branded stores, it has been forced to work with national, regional and local distributors, each of which takes its cut.
"I love India," Tim Cook told analysts last summer. "But the sort of the multilayer distribution there really adds to the cost of getting products to market."
This time the company tried something different. According to the Wall Street Journal's India Realtime, it cut deals with two large electronics chains -- Ingram Micro and Reddington -- that signed up the celebrities, generated the publicity and turned out the crowds. It also brought the iPhone 5 to Indians faster than ever before -- 42 days after the device launched in the U.S. -- while the buzz was still high.
The new approach seems to have worked. There were stock-outs in all three cities, suggesting that there may be enough buyers in India with disposable income and a taste for quality electronics for Apple to finally gain more than the toe hold it now has on the subcontinent.
Below: A few videos from the launch parties.
New Delhi, Mumbai and Bangalore: