One bil­lion rea­sons why Ap­ple boss is vis­it­ing In­dia

Irish Independent - Business Week - - TECH­NOL­OGY - Saritha Rai

SMART­PHONE ship­ments may be sput­ter­ing in the US, Eu­rope and other ma­ture mar­kets, but in In­dia, there’s the prospect of a bil­lion new de­vice sales. It’s prob­a­bly no sur­prise then that Ap­ple chief ex­ec­u­tive of­fi­cer Tim Cook is mak­ing his first trip to the coun­try.

Cook, who be­gan his multi-day visit yes­ter­day, is un­veil­ing a de­vel­op­ment cen­tre for dig­i­tal maps in Hy­der­abad and in­tro­duce an ac­cel­er­a­tor pro­gramme for iOS de­vel­op­ers in Ban­ga­lore, a per­son with knowl­edge of the trip said.

Ap­ple is push­ing to open its first re­tail stores in the coun­try, though it’s not clear whether any dis­cus­sions will be part of the chief ex­ec­u­tive’s agenda on this trip.

The prize is more than 1 bil­lion in smart­phone sales in the next five years, ac­cord­ing to re­searcher Coun­ter­point. As China’s mar­ket be­comes more sat­u­rated and peo­ple across the globe up­grade their smart­phones less fre­quently, Ap­ple, Sam­sung and other ven­dors are keen to sell to In­dia’s mid­dle class, which is pro­jected to quadru­ple to 200 mil­lion by 2020.

Signs of this ex­plo­sive rise in con­sump­tion al­ready emerged in the first three months of this year, when Ap­ple re­ported that ship­ments in In­dia grew 56pc, even as iPhone sales de­clined glob­ally for the first time ever.

“I’m en­cour­aged by the re­sults that we’re be­gin­ning to see there, and be­lieve there’s a lot, lot more,” Cook said on Ap­ple’s lat­est earn­ings call. “I view In­dia as where China was maybe seven to ten years ago from that point of view, and I think there’s a re­ally great op­por­tu­nity there.”

Ap­ple didn’t im­me­di­ately re­spond to a re­quest for com­ment on the map­ping cen­tre and ac­cel­er­a­tor.

Cook’s visit is un­der­scored by the chal­lenges that Ap­ple al­ready faces in In­dia. Apart from the ap­pli­ca­tion to open Ap­ple Stores, the com­pany is also fac­ing stiff op­po­si­tion to its ef­forts to im­port and sell re­fur­bished iPhones in the coun­try.

Ap­ple isn’t even among the top 10 in terms of smart­phone mar­ket share, ac­cord­ing to Bloomberg In­tel­li­gence an­a­lyst Si­mon Chan.

Sam­sung boasts the big­gest share, fol­lowed by Mi­cro­max In­for­mat­ics, Len­ovo Group (in­clud­ing Mo­torola) and In­tex Tech­nolo­gies (In­dia). “Cook is cer­tainly go­ing to come with an agenda,” said Vishal Tri­pathi, a re­search di­rec­tor at Gart­ner In­dia. “High on that list is per­mis­sion to open Ap­ple Stores in In­dia, bring up the closed chap­ter of im­port­ing and selling re­fur­bished phones in the coun­try and also ex­plore what’s in it for Ap­ple if it brings as­sem­bly and man­u­fac­tur­ing to the coun­try.”

Cook is plan­ning to meet Prime Min­is­ter Naren­dra Modi, al­though that sched­ule hasn’t been fi­nalised be­cause the re­sults of sev­eral In­dian state as­sem­bly elec­tions are due this week, said the per­son, who asked not to be iden­ti­fied as the in­for­ma­tion is not yet pub­lic.

“There is a mas­sive op­por­tu­nity for ev­ery player in the mo­bile value chain when the sec­ond largest mar­ket by vol­ume is still un­der pen­e­trated and grow­ing, while the rest of the world smart­phone de­mand has waned,” Peter Richard­son, Coun­ter­point’s re­search di­rec­tor, wrote in the re­port. “In­dia is the next China.”

Ap­ple has a net­work of 33 stores in China, which made up a quar­ter of the com­pany’s rev­enue in the lat­est quar­ter.

Cook’s trip to In­dia comes on the heels of a deal struck in China this month, where Ap­ple is in­vest­ing $1bn in the car-hail­ing app Didi.

One key hur­dle fac­ing Ap­ple in In­dia is price, ac­cord­ing to BI’s Chan. In­dia’s con­sumers aren’t will­ing to pay as much for the gad­gets in a mar­ket where phones are typ­i­cally bought out­right and aren’t avail­able on call­ing plans.

While Ap­ple’s most af­ford­able smart­phone, the iPhone SE, starts at $399, the av­er­age selling price for a phone in In­dia is pro­jected to de­cline to $102 by 2018 from $135 in 2014, ac­cord­ing to IDC, less than half the global av­er­age.

IDC’s smart­phone sales fig­ures from the lat­est quar­ter also un­der­line how nascent In­dia’s mar­ket re­mains, and how much more it has to go to reach the lofty pro­jec­tion for one bil­lion in ship­ments in five years.

Ven­dors sold 23.5 mil­lion phones in In­dia in the pe­riod, a rise of 5.2pc from a year ear­lier.

“The catch in In­dia is that the cus­tomers are very price sen­si­tive,” Chan said. “If you think China is cheap or low end, then In­dia will be even lower.” (Bloomberg)

While sales are slow­ing in ma­ture mar­kets, In­dia has po­ten­tial for Tim Cook’s iPhones – but price is an is­sue

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