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India-Apple
Reuters/Shailesh Andrade
About time.
A BIGGER BITE

Apple is suddenly taking India seriously—and it has nothing to do with pleasing Indian fanboys

By Devjyot Ghoshal

India loves Apple, but Apple couldn’t give a damn. Or so it seemed till now.

For years, Apple fanboys in India—and of those there are many—were forced to wait weeks and months before the newest device from Cupertino officially arrived on the subcontinent. Unofficially, of course, there was always the black market if wildly inflated rates didn’t matter, or the favourite NRI cousin willing to fly it in.

Now, Apple seems to have suddenly realised just how incredible—and important—India’s 160 million-odd smartphone users are. In a conference call on Jan. 26, after announcing its first quarter results, Apple CEO Tim Cook revealed his enthusiasm:

… India is also incredibly exciting. India’s growth, as you know, is very good. It’s quickly becoming the fastest growing BRIC country. It’s the third-largest smartphone market in the world, behind China and the United States.

The population of India is incredibly young. The median age there is 27. I think of the China age being young, at 36, 37 and so 27 is unbelievable. Almost half the people in India are below 25. And so I see the demographics there also being incredibly great for a consumer brand and for people that really want the best products.

And as you know, we’ve been putting increasingly more energy in India.

That energy has manifested itself in a handful of ways. For one, with five distributors now on board, Apple has made deeper inroads into the Indian marketplace than ever before. Combined with a range of enticements—from discounts to buyback schemes—it has driven sales to 800,000 devices in the October-December quarter, the company’s best-ever performance in India, according to analysts.

In all, Apple iPhone sales in India jumped by 76% last quarter. Now, compare that with Apple’s forecasts of iPhone sales (paywall) recording its first-ever decline. Or, with the performance of a key market like China, where iPhone sales increased about 19% last quarter, although admittedly off a much larger base.

Even Cook, in the same conference call on Jan. 26, didn’t seem too optimistic about Apple’s major markets:

We’re seeing extreme conditions unlike anything we’ve experienced before just about everywhere we look.

Major markets, including Brazil, Russia, Japan, Canada, Southeast Asia, Australia, Turkey and the Eurozone, have been impacted by slowing economic growth, falling commodity prices and weakening currencies.

That’s perhaps why India’s becoming increasingly important for Apple.

“A 200 million installed base (of smartphones) for a population of one billion isn’t much,” said Tarun Pathak, an analyst at Counterpoint Research, a technology market research firm, outlining the sheer amount of space that Apple has for growth in the expanding Indian smartphone marketplace.

And “Apple is still an aspirational brand in a country like India,” added Pathak, which means that everyone from salaried professionals in big cities to businessmen in smaller towns want a piece of it.

Much of Apple’s intent in India will be clear in the next few months, depending on how much the firm can push through its widening distribution network, together with bigger advertising campaigns and more discounts and incentives. “Apple’s performance in the coming two quarters will be the test,” Pathak explained. “If they can sell through (near last quarter’s numbers), it will give them the momentum.”

For that to happen, however, Apple needs to put its money where its mouth is.