Apple Looks To India For Growth; Announces New iOS App Design And Development Accelerator in Bangalore

After flying out from China where Apple announced a $1 Bn investment in the local ride-hailing app Didi Chuxing, Apple CEO Tim Cook has landed in India to announce a new iOS app design and development accelerator in Bangalore. The initiative will support engineering talent and accelerate growth in India’s iOS developer community. The iOS App Design and Development Accelerator is expected to open in early 2017.

Apple’s team will work to instruct developers on best practices, help them hone their skills and transform the design, quality and performance of their apps on the iOS platform. Each week, Apple experts will lead briefings and provide one-on-one app reviews for developers. The facility will also provide support and guidance on Swift™, Apple’s intuitive programming language created to build apps for iOS, Mac, Apple TV and Apple Watch.

Tim Cook stated, “India is home to one of the most vibrant and entrepreneurial iOS development communities in the world. With the opening of this new facility in Bangalore, we’re giving developers access to tools which will help them create innovative apps for customers around the world.”

Tim’s announcement to open the app design centre in Bangalore received a huge welcome from the Indian startup community. Deepinder Goyal , CEO at Zomato, stated, “This is a huge vote of confidence in India’s developer community and a tremendous opportunity to gain world-class design and development expertise. Apple’s support will help drive growth and accelerate progress among the country’s vast talent pool.”

Similarly, Snapdeal’s co-founder Kunal Bahl was also thrilled by Apple’s decision to establish a local presence in India. Kunal said,

“We have worked closely with Apple to transform the Snapdeal app and offer our users the best possible experience. Apple’s expert guidance on the interface and user experience has helped us build an app that our consumers love. We are thrilled Apple will have a local presence which will amplify our efforts to develop more high-quality apps for our digital commerce ecosystem.”

NASSCOM President R Chandrashekhar also hailed the move saying that Apple’s investment in Bangalore through its iOS Development Accelerator will have far-reaching effects for the area’s rapidly growing and highly talented developer community. He added, “The skills and training they gain through this effort will significantly improve their app design and help them reach a broader market. Initiatives like these move the country forward in our efforts to advance a growth-led and sustainable technology sector.”

Development Centre In Hyderabad

Meanwhile, there is also news about Apple launching its development centre in Hyderabad on Thursday, 19 May.  The facility will commence operations on a 1 lakh square feet leased space in WaveRock, which might be expanded to 2.5 lakh square feet by next year. It will have 2,500 employees. However, it was not confirmed if Cook will be present to inaugurate it. However, he is expected to meet Andhra Pradesh Chief Minister N. Chandrababu Naidu, who is trying to attract big ticket investments for his state.

Telangana IT minister K.T. Rama Rao hinted about the announcement to come tomorrow in a tweet which said:

Will share a Big news with you all day after tomorrow. Suspense till then

— KTR (@KTRTRS) May 17, 2016

Courting The Price Sensitive Indian Smartphone Market

Before he leaves the country, Tim will also meet with Prime Minister Narendra Modi, who he met in Silicon Valley last year. His visit comes at a time when Apple is looking for new growth markets after its first ever decline in iPhone sales. More than 100 Mn smartphones were sold in India last year and the market is expected to grow by 25%  this year, making it one of the fastest growing smartphone markets in the world.

However, Apple only has about a 2% market share, given the fact that its phones are priced much higher than rivals like Micromax, China’s Xiaomi, Lenovo Group, and Samsung, which offer new, inexpensive smartphone models every few weeks with features typically found in higher-end devices, at prices starting as low as $100 to $250. Interestingly, Apple’s sales surged 56% in the first three months of this year, driven mainly by cheaper older-generation devices such as the iPhone 5S.

No Refurbished Phones, A Better Retail Presence

In order to tap this market of price-sensitive consumers, Apple wanted to import and sell refurbished phones in the country, but the proposal was shot down by the government. Apple sells what it calls refurbished iPhones at a discount in some countries, including the United States. But India, which is pushing the ‘Make in India’ initiative to boost the competitiveness of its manufacturing sector, rejected the proposal citing rules against importing used electronics. The proposal was also opposed by domestic phone makers who claim selling refurbished iPhones would breach India’s anti-dumping rules.

In the light of this, Tim’s visit is expected to throw some light on whether Apple has plans to set up production facilities, which would boost the PM’s “Make in India” initiative. Maharashtra is already in talks with Apple product maker Foxconn Technology over it setting up an iPhone plant there.

To successfully tap into India’s smartphone boom, Apple needs a better retail presence and reduce the prices of iPhone. Apple, which currently retails in India through local partners, is already seeking government approval to set up its first store in the country. According to speculations, locations are likely to be in Delhi, Bangalore and Mumbai.

It also has to figure out a way to solve the distribution challenge in India. In China, Apple struck a deal with China Mobile in 2013 to make iPhone available in thousands of China Mobile outlets. In India, consumers typically buy handsets separately and use prepaid carrier services. Thus Apple is struggling to get its iPhones into smaller cities, where many shoppers purchase smartphones from mom-and-pop shops. To reach these users,  Apple has increasingly turned to distributors with relationships in various regions of the country.

How many of these issues will Tim be able to address, during his short visit to India and lobbying with the government, will be revealed in times to come.