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Apple’s Long-Term India Plans Include Cheaper iPhones, Retail Stores: CEO Tim Cook

Apple’s Long-Term India Plans Include Cheaper iPhones, Retail Stores: CEO Tim Cook

Apple had 1.2% Indian market share at the end of December 2018

Tim Cook said price adjustments in India for iPhones have brought better results

Apple has reported a revenue of $58 Bn in Q2 2019

Though Apple has a market share of just 1.2% in India’s smartphone market, the company has said that some adjustments in India have seen good initial reactions in the price-sensitive market.

Addressing questions on the Indian market during the company’s earnings call, Apple CEO Tim Cook emphasised that everything that they do in India has informed the company on how to approach the market. “We tried to learn the best we can and fold that into our thinking and we will obviously do that with this as well,” he added.

Cook is largely referring to the adjustments made in the selling price of iPhone XR, reduced by up to 22% in the face of stiff competition in the premium smartphone segment in India.

For the quarter ended March 30, 2019, Apple has reported a revenue of $58 Bn, a decline of 5% from Q2 2018. It’s not just iPhones which have had declining sales, even Apple’s Mac computer lineup has seen a downturn. International sales of Apple devices accounted for 61% of the company’s quarterly revenue.

Here’s What Tim Cook Thinks Of India

Addressing the question on trying to really aggressively ramp up share in India, Cook told investors that India is a very important market in the long term for Apple, even if it is a challenging market currently. Cook says Apple is learning from its India experience every year.

“We have started manufacturing there, which is very important to be able to serve the market in a reasonable way. And we’re growing that capability there. And we would like to place retail stores there. And we’re working with the government to seek approval to do that,” he added.

Cook emphasised that the company plans on tackling the Indian market with “all of our might.” He also shared that the company has opened an App Accelerator programme in India in Bengaluru. However, Apple CEO noted that the company’s fortunes in India are dependent on long-term plays and is not going to be on overnight success.

“I think the growth potential is phenomenal. It doesn’t bother me that it’s primarily an Android business at the moment because that just means there’s a lot of opportunity there,” he concluded.

Apple’s Fight For India

Apple is struggling to stand its ground in the highly competitive and lucrative Indian smartphone market. The company’s market share fell from 2.5% at the end of December 2017 period to 1.2% at the end of December 2018.

Here’s what the company has been doing to retain its presence in India:

  • Apple through Foxconn Technology Group will begin mass production of iPhone X in India after starting production of iPhone 7 as well in Bengaluru
  • Apple has requested to Indian government for an exemption from duty on manufacturing and repair units, as well as components, capital equipment and consumables for smartphone manufacturing.
  • The company has sought tax concessions for years, especially on India’s condition on tax breaks, that 30% of the smartphone be manufactured through local sourcing of components.
  • Apple reportedly plans to open its first retail store in India, which has been facing several roadblocks including adhering to local sourcing norms set by the Indian government.

Apple is struggling to make its presence in the market dominated by Samsung, Huawei, Xiaomi and other Chinese smartphone brands. Apple’s premium handsets have been facing stiff competition from OnePlus, Samsung, Xiaomi and others.

The smartphone user base in India is projected to reach 829 Mn by 2022, as the country is currently the world’s fastest-growing smartphone market with 23% CAGR. However, within the premium segment, where Apple operates, the growth rate is around 8%, so there’s definitely a lot of room for growth in this segment.