Apple is ready to make some adjustments to its India strategy. While announcing its financial results for Q2 2019, CEO Tim Cook reportedly told analysts that Apple is planning to grow its manufacturing capability in India. Apple currently assembles iPhone 7 units sold in India at its supplier Wistron's Bangalore facility.
Further, according to Cook, the temporary price drop of 22% of iPhone XR in April taught Apple something. Cook also said the price correction of some models has allowed the company to improve sales.
As per market reports, Apple iPhones account for less than 1% of Indian smartphone market, largely dominated by Android-based vendors like Samsung and Xiaomi.
The slowdown in the Chinese market is another reason for Apple’s renewed interest in India. “All other markets are already saturated for them and the other ones like Africa are yet to arrive. The largest opportunity for them outside the US is India," said Faisal Kawoosa, founder and chief analyst at market research firm techARC.
Tarun Pathak, associate director at Counterpoint Research, is of the opinion that even India cannot offset the decline that Apple is seeing in key markets. China is a huge market for Apple and even after a slowdown, the volume of phones sold there is a lot more than in India.
Apple currently pays import duties of 20% on every handset it ships into the country, which makes iPhones costlier than in the US. For instance, the iPhone XR started at $749 (approx ₹52,809 after conversion) in the US, but was released in India at ₹76,900.
“Manufacturing will help them bring down the price. But, they need to understand that the definition of premium has changed in India after the arrival of OnePlus. Even if they manage to bring down the price, their phones will be available in the league of premium smartphones by Samsung and Google, and that market is less than 1%," said Kawoosa.
Counterpoint’s Pathak, on the other hand, feels that even a price cut of 10% to 20% is a big deal in markets like India. Even though Apple will have to start from scratch, be it in terms of manufacturing or improving market share, the fact that nothing is wrong with their products makes them positive about their India prospects.
Another area where there is a huge gulf between India and the US is Apple’s services, which account for a major chunk of the company’s revenue. However, most of its services, except Apple Music, are not available to users in India. Pathak pointed out that the push in services will depend on the device base. Eventually, if the device base increases, there will be users who will pay for services. Once Apple has the user base, they can even create plenty of India specific content too.
