Apple made some quite grave moves this week in Mountain View, California as did Google at its I/O Developers Conference! Needless to say, both occupied this week’s headlines…
With CEO Tim Cook in India to meet Prime Minister Narendra Modi, on Wednesday news broke that Apple would establish an iOS design and development accelerator in Bengaluru, the country’s home of startups.
Then, a day later, Cook revealed that a second development centre, this one for the Maps app, will open in the city of Hyderabad. It’ll employ up to 4,000 people, according to the company. These announcements are ostensibly just about software — but they could very well have a big impact on Apple’s iPhone business.
“India is the next China,” says Neil Shah, research director at Counterpoint Research. He says that India has overtaken the US to become the world’s second-biggest smartphone market and that success in a nation of 1.3 billion people is crucial because its growth phase has just begun.
“India is still underpenetrated and growing, while the rest of the world’s smartphone demand, especially in key markets such as China and the US, has waned,” said Shah.
But despite enjoying tremendous popularity around the world, Apple’s impact in India has been uncharacteristically weak. Shah says the Cupertino, a California-based company sold 2 million smartphones in India in 2015. When Counterpoint Research released its data on the top smartphone brands in the region for 2016’s first quarter, Apple didn’t crack the top five.
The problem is price, with Shah, explaining that “more than 75 percent of the phones [sold in India] are under $150.” Budget buyers either have to go for iPhones from four or five years ago, or for the iPhone SE, the cheapest new iPhone, which retails in India for around $580.
All this comes as the perennially successful company’s global iPhone sales dropped quarter-on-quarter for the first time ever.
“The talent here in the local area is incredible,” Cook said in a statement alongside the news of the Hyderabad centre. “We are looking forward to expanding our relationships and introducing more universities and partners to our platforms as we scale our operations.”
On the Maps development centre, Shah says that recruiting India’s talented, “cheaper” workforce “could fill the huge gap from a resource perspective for Apple, where quality and accurate maps have been one of its weaknesses.”
But these investments could be the first in a series of moves to secure a better spot for itself in the market.
Apple has been rumoured to be lobbying for two crucial advancements in India: to open its own Apple Stores and to get permission to sell refurbished iPhones.
Prospective customers in India can currently only buy iPhones through authorised resellers. Official outlets would give the company an opportunity to sell its products directly to consumers, cutting out the middle man. Government policy in India is that foreign companies setting up their own stores buy at least 30 percent of their parts from local suppliers.