Tim Cook may want to do a China in India for Apple4 min read . Updated: 17 May 2016, 09:41 PM IST
As Apple faces declining revenue in Chinaits second-largest market after the USCook's focus will now be on growing Apple's market share in India which has become the third-largest smartphone market in the world
Mumbai: Way back in the 1970s, when Steve Jobs visited India, it was not to do business; it was a spiritual quest. Back then there were no iPhones and iPads. Even the famed Macintosh personal computers would have to wait for almost another 10 years to make its market debut.
By the mid-80s, brand name Apple however had become a household name among geeks and designers not just in the US but also back here in India. Designers would swear by the picture quality and seamless integration of hardware and software in Apple products, leading to a crash-free experience.
The credit for all this went to Job’s focus on creativity as a leader. However, the lofty perception of Apple products and Jobs never got translated into a corresponding market share in India.
Consider these numbers. According to research firm International Data Corporation’s (IDC) Quarterly Mobile Phone Tracker released on 17 May, 23.5 million units of smartphones were shipped in India in the first quarter of 2016.
Samsung continued to dominate the Indian smartphone market with 26.6% share, in spite of shipments dipping both year-on-year and sequentially (quarter-on-quarter).
Micromax retained the second position with 6.9% growth over the same period last year but shipments fell 17.9% sequentially for the second consecutive quarter as volume dipped sharply in the entry level sub-$75 segment.
Intex regained its third position, although shipments sequentially declined by 10% but grew marginally over last year. Lenovo (including Motorola) slipped to fourth position as shipments declined 35.8%, coming off from a sharp spike in the previous quarter.
Reliance Jio replaced Lava as the fifth largest smartphone vendor with huge shipments of 4G devices, with the company building its VoLTE (voice over LTE) devices’ base by shipping its LYF-branded smartphones in the channels, the IDC report said.
Where does that leave Apple’s market share?
Just around 2%. Would that justify Tim Cook, Apple’s current CEO, taking a trip to India to meet the Prime Minister?
Cook, who rose up the ranks from a sales and operations role to head the company in August 2011 six weeks before Jobs died, may not be as charismatic as Jobs but he is a good businessman. He wants to do a China in India, and with good reason.
To begin with, Cook will be coming to India tonight from China where he would have met, according to a 6 May report by Reuters, “high-level government officials" including those in charge of “propaganda".
The meeting, unlike his earlier trips to China, assume significance since Apple faces declining revenue in China—its second-largest market after the US.
In April, Apple’s iBook Store and iTunes Movies services were shut down six months after its launch in China on the orders of the government’s media watchdog, State Administration of Press, Publication, Radio, Film and Television.
Their closure is an attempt by China’s President Xi Jinping to consolidate government control of the web and the media, a move that has apparently worried Apple’s investors.
The Reuters report, citing a CNBC interview, said that major shareholder Carl Icahn sold his stake in the iPhone maker, specifically citing worries about China that the government could “make it very difficult for Apple to sell there".
Apple did not respond to the Reuters article.
Cook will now be in India where he needs to grow Apple’s market share since India has become the third-largest smartphone market in the world after China and the US. The number of smartphone users is expected to reach 369 million by 2018.
Following the “Make in India" campaign to promote local manufacturing in India, more than 25 vendors are now making smartphones locally in India, according to IDC. More than two-thirds of the smartphones shipped in the first quarter of 2016 were assembled within the country.
Moreover, 4G-based smartphone shipments clocked 15.4 million units in the January-March quarter of 2016, growing more than six times over the year-ago period.
Hence, Cook obviously has so many reasons to be in India. He needs to open Apple-branded retail stores to give Indian iPhone fans the Apple experience. But for that he needs to convince Prime Minister Narendra Modi that the sourcing laws of the country need a rethink.
In an interview to CNBC India on Tuesday, NITI Aayog chief executive Amitabh Kant has given an indication that a local sourcing waiver is likely. Cook also needs to convince the government that Apple can do research and development in India, which may warrant a visit to Apple India’s unit in Hyderabad.
He may also need to strengthen his own sales and marketing base in Noida, and visit Bangalore to collaborate with start-ups.
In 2016, 39 start-ups visited Silicon Valley as part of software body Nasscom’s Innotrek—an annual showcase of early-stage Indian product, Internet of Things, gaming and technology start-ups that are at the threshold of the next wave of software dominance from India. One of the companies that these start-ups visited was Apple Inc.
If Cook can convince the Indian government to allow him to keep on selling refurbished iPhones, it will help Apple keep Chinese and local Indian manufacturers at bay.
As for 4G, all major telecom services providers are gearing up to deliver these 4G services but the one company that everyone is on the watchout for is Reliance Jio.
Will Apple have a tie-up with Reliance Jio? Well, both these companies share one thing for sure—apart from excellent distribution networks globally—and that is keeping their plans as close to their chest as possible. We will spill the beans when we get more news.