Five years ago, Tim Cook was named CEO of Apple Inc. in a highly scrutinized corporate handover. Cook took over from an ailing Steve Jobs, Apple’s visionary founder and CEO, whose entrepreneurial abilities and product innovations transformed Apple into a household name. Five years later, the changes can be felt in India, a market that Jobs never considered significant, even though iPods, iPads and iPhones did manage to find their way into the hands of select Indian consumers.
Jobs’s extraordinary vision and leadership took the company from strength to strength, positioning it as the world’s most innovative and valuable technology company. Apple recently sold its billionth iPhone. But in all of his long and meteoric career, his focus was primarily the markets of North America and Western Europe. India was the step-child that remained by and large neglected, barring his one personal visit to the country as a backpacking hippie in the early 70s.
By contrast, Cook visited India in May this year and sees it as an important market for Apple. And while it is too early to say that he has reversed Jobs’s benign neglect, he has taken the first step. He launched an accelerator to support developers creating innovative mobile apps in Bengaluru, and opened a new office in Hyderabad that will focus on development of Maps for Apple products, including the iPhone, iPad, Mac and Apple Watch. Both the investments are good though Cook did not disclose the amount of the investment, only mentioning that it is likely to accelerate Maps development and create up to 4,000 jobs. Cook also met the PM to seek the government’s approval to open local retail stores.
But if a country’s importance to a global firm is measured by its CEO visits, then Cook’s score is telling: he has visited China 9 times in the five-year span and India only once. Jobs, of course, would score zero. But then, China is the second-largest market in the world for Apple, after the US. Cook touched down in China before coming to India in May this year and announced a whopping $1 billion in Chinese ride-hailing app Didi Chuxing. However, as the Chinese smartphone market becomes increasingly saturated, Cook’s focus shifts to India as its next source of growth. India is the world’s third biggest consumer market for Apple, after the US and China.
India was also the lone bright spot in Apple’s quarterly results. India iPhone sales jumped 51% in the first nine months of Apple’s current business year while Apple’s sales in India crossed the $1 billion mark for the first time last year although it has a minuscule market share (less than 2%) of the country’s smartphone market. The 51% increase in iPhones sales in India is significant given that globally, sales of the smartphone have fallen for the last two quarters. The iPhone is so critical to Apple’s balance sheet that the sharp drop in its sales saw profit slumping 27% from the year-ago period to $7.8 billion, while revenue fell 14.6% to $42.4 billion, in the third quarter results announced last month.
For a company that depends on iPhones for 60% of its revenue, the news is not good for Cook as he prepares to release a new model in September. However, with market research firms touting India as the future market for growth that will help generate new mobile phone user growth, and the only region where sales of smartphones will continue to grow at double-digit pace in the next two years, it is not surprising that Cook and team are keen on tapping the world’s fastest-growing smartphone market to counter slowing sales growth in other markets.
Vishal Tripathi of Gartner Inc. agrees: “India is an important market for Apple since the other growth markets of China and the US have become stagnant. Also, the Indian government is sending positive messages, focused as they are on Digital India. ”
Hence, Cook obviously has several reasons to be in India as he tries to play catch-up.