WHERE TO GROW?

Apple has won a battle in India but it has yet to win the war

Obsession
The Next Billion
Quartz india
Obsession
The Next Billion
Quartz india

Apple is dreaming big in India.

On the the heels of announcing a new development center in the country, Apple reported in an earnings call on May 02 that in the past quarter, revenue in India was 20% higher than the same period a year earlier. “We have a ton of energy going into the country on a number of fronts,” said chief executive Tim Cook. Thanks to the growth of India’s 4G infrastructure, as well the country’s young and tech-savvy population, “there is a huge opportunity for Apple there,” Cook says.

In the past year or so, Apple has scored a series of wins in India: In 2016, it reached a major landmark: 2.5 million iPhones sold in one calendar year in India. Apple sales in India got an unlikely boost from demonetization in November. The company has long wanted to produce hardware in India, and finally made headway on the issue: Apple is expected to start producing (paywall) the iPhone 6, iPhone 6S, and iPhone SE out of a Bengaluru factory run by the Taiwanese manufacturer Wistron, and it has secured permission to set up a distribution center on the outskirts of Mumbai.

But there’s still a lot of ground for Apple to cover in India. “We agree that we are under-penetrated,” Cook said on the May 02 call. “They’re moving at a speed that I have not seen in any other country in the world once they were started. And it is truly impressive.”

Catching up will be a challenge for Apple. The company has sought concessions to the regulation mandating companies retailing in India to source at least 30% of their parts locally. But those have not been granted, commerce and industry minister Nirmala Sitharaman told the Rajya Sabha (the Council of States, one of two houses of parliament in India). Apple had earlier sought and failed to secure permission to sell refurbished second-hand devices. (The government was concerned that they would dump used goods and add to India’s spiraling e-waste problem.)

In India, Apple’s latest handsets cost upwards of $1,000—well above the $158 average smartphone price in the country. That’s led its market share to slip to a measly 2%, falling far behind Android devices. Recently, Apple resurrected the iPhone 6 at a lower price but in a market littered with stiff competition from Chinese phones, it is struggling to make a real dent.

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