Apple CEO's India visit:What's on the cards?

Apple CEO's India visit:What's on the cards?

Author | Ronald Menezes | Wednesday, May 18,2016 8:29 AM

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Apple CEO's India visit:What's on the cards?

Apple has made its presence felt in India over the past few years, releasing the latest phones and tabs within days of its launch in the U.S has become a part of the company’s policies for some time now.  According to latest media reports Apple’s CEO Tim Cook who is currently in China is slated to visit Narendra Modi this week. Just when global revenues for Apple were nose diving, India seemed to offer a glimmer of hope in terms of revenues for the Cupertino based tech-company. India is beginning to better its ‘ease to do business’ rankings and this may just be one of the reasons attracting this visit between the Apple’s CEO and the PM.

Last year for the first time Apple launched a TVC in India. It was common until then for potential Indian buyers to see ads for Apple products in print media with various buy back and EMI schemes. Apple’s strategy witnessed a change and the TVC was released for millions of TV viewers in India. Apple’s aim was clearly to attract more eyeballs and earn better revenues from a country that is the second largest smartphone market and is fast growing.

Apple’s share in India is growing considerably. According to a recent research conducted by Canalys, Apple is the second fastest growing vendor in the top 10 list for India. “Apple is outperforming the overall market in India, and still has great growth potential,” said Canalys Mobility Analyst Wilmer Ang. Samsung topped the list of smartphone vendors but lost its market share for devices over INR 20000 by 15 percent while Apple increased its market share by 18 percent.

When Apple released their second quarter report card, India was one of the few countries that gave them a bright window. While Apple reported its first quarterly sales decline in 13 years - a loss in revenue from $58 billion in the similar quarter in 2015 to $50.6 billion in 2016, the iPhone sales in India were reportedly up by 56 per cent from a year ago. The gross margin was 34.9 percent compared to 40.8 per cent for the same period.

According to Counterpoint Research, iPhone sales in the January-March period in India soared to a record 630,000 units and the market tracker now forecasts a rise to 3 million in the calendar year, compared with just over 2 million in 2015. Furthermore, Apple expects things to get even better once high-speed 4G networks gain traction across the country.

In a bid to increase their revenues in India, Apple introduced the idea of selling refurbished phones in the country. The refurbished phone business would help Apple compete with other low cost phones that are currently available in India. The government of India, however, opposed the plan for the same as allowing sale of refurbished phones could hamper the ‘Make in India’ initiative.

To build its story further with India the idea of refurbished phones being sold was not the only one that Apple revealed for the country. It reportedly looks to open three retail stores in the India over the next 18 months. Apple currently has no official retail presence in the country, but new locations in Delhi, Bengaluru, and Mumbai will mark the company’s entrance.

In a bid to boost the revenues for Apple, Foxconn reportedly has plans to start a manufacturing unit for Apple in India. According to media reports it had sent officials to scout for places in Maharashtra that were suitable for the unit. A report by ET says that the company has found 2-3 locations covering about 1200 acres of land in the state.

Indian consumers are looking forward to cheaper smartphones with the best features. While smartphone companies are doing their best to meet the demands of the consumers Apple continues to sell premium phones at higher prices. The iPhone 5S is the only phone under the INR 25000 category that drives the market for lower end phones for Apple in India. The fate of the phone hangs in the balance as it is on the verge to phase out and iPhone SE would take its place.

It is yet to see if Apple could push its idea of selling refurbished phones in India or if they would start manufacturing phones in the country as early as 2017. With one TVC released in the last one year we may see Apple’s marketing strategies trying to change that in the months to come and woo customers through various other initiatives.

Cook may have not wanted the meeting with the Prime Minister to be scheduled at a better time than this. China is currently Apple's second-largest market after the US but with a potential that brings Apple’s CEO to India for the first time since 2011 shows how seriously he takes the country as a market and currently, growth for Apple and India seems to be the agenda between Cook and Modi.

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