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From arrogance to servility: Apple’s U-turn in India

Quartz india
Quartz india

In September 2014, Apple launched the much-awaited iPhone 6 and iPhone 6 plus. The new phones were launched in 10 countries, including Hong Kong and Singapore in Asia, on the same day. But as has been the case for over a decade, Apple neither launched the two devices in India nor announced a date by which the smartphones would be made available in the country.

The company’s fans in the country purchased the phones in the grey market for anywhere between Rs100,000 to Rs200,000—around five times the official price in the US.

India was definitely not high on Apple’s radar till a few years ago. “I love India but I believe that Apple has higher potential…in some other countries. That doesn’t mean we’re not interested in India—we are. We’re going to continue putting some energies there, but in the intermediate term there will be larger opportunities elsewhere,” Apple CEO Tim Cook said in July 2012.

But over the recent months, India has become a promising market for the American tech giant. While announcing the company’s quarterly earnings on April 26, Cook called India a “really great opportunity.” “We’ve been working (in India) with great energy over the last 18 months or so, and I am encouraged by the results that we’re beginning to see there,” Cook said during the company’s earnings call.

And, less than a month later, Cook made his first official trip to the world’s second largest smartphone market.

New love

Until recently, Apple was just playing in the premium smartphone segment in India, which is around 4% of the overall market as per some estimates. Now, the company desperately wants to sell more affordable, refurbished phones, which would drastically improve its sales in a price-sensitive India. So far, it has failed to get an approval for the same from the government.

Despite regulatory restrictions, India is among the top priorities for Apple going forward, Cook said in an interview to television channel NDTV. The company is now approaching India “very humbly” and hoping to stay in the market for a “thousand years,” he said.

On the first day of Cook’s trip, Apple announced the setting up of a mobile apps accelerator in Bengaluru by early 2017. On the next day, Cook inaugurated Apple’s new office in Hyderabad. The company will hire up to 4,000 new employees at this office, Apple said.

Even tough the company did not announce the exact amount of investments in the two new facilities, Cook told NDTV that Apple would spend “several hundred million dollars” on the Hyderabad office and the Bengaluru centre would also be a “major investment.”

Cook also met several Indian business leaders, including senior executives of Reliance Industries, ICICI Bank, Bharti Airtel and Tata Group. He engaged with the country’s booming technology startup industry and visited the office of online restaurant discovery startup Zomato. The Apple boss even found the time to visit an Indian temple, attend a Bollywood party and watch a cricket match.

However, the lack of investment numbers disappointed some commentators. “I will call it a great exploration effort, and do not see any immediate results,” Vishal Tripathi, research director at Gartner told IANS. “I won’t call his visit a wow factor at this moment.”

Slowing China

Cook’s trip to Asia came at a time when Apple’s growth is slowing in its second-largest market China, and rising sharply in India. In the company’s second quarter, revenue from China fell for the first time ever, while it rose by 56% in India.

India is now touted as the next China for Apple. However, Cook said there was no connection between the two developments.

“It (plan for India) has nothing to do with China,” Cook told NDTV. “India is different than China. India is a different place and we are going into India very humbly. We’ve been selling here for a while as you know, but we are taking a step back in viewing India strategically and I do believe that the reforms that are going in India, means that India has an enormously bright future and we would like to be a part of that.”

During the second quarter of 2016, Apple’s revenue in China stood at $12.5 billion (pdf). In comparison, India is a minuscule fraction of the company’s business. The company does not even break down its revenue for India and according to some estimates, the country makes for less than 1% of Apple’s overall sales. And while Apple made no big bang announcements in India, Cook made a massive $1-billion investment in a local ride-hailing service, Didi Chuxing.

But the secretive company seems to be waiting for the right time to start making big bets on Asia’s third largest economy.

“You know I came here to learn about the people and the culture and how business is done and what people are interested in and their hopes and aspirations,” Cook told NDTV. “I’m leaving with more knowledge.”

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