Apple is the world's biggest technology company in more than one ways. But it is also a company largely indifferent to India. Apple does sell its products in India. But unlike say Google or Microsoft, it doesn't have any big office or development centre here. It has a handful of people looking after the company's operations in the country, but compared to what a firm like Samsung has, the scale of this operation is minuscule.
This week all of this changed.
In a first for an Apple CEO, the company's boss Tim cook visited the country. Publically his agenda has been to get a feel of the country, its culture and the way business is done here. He met some top businessmen, attended a grand Bollywood party and met Prime Minister Narendra Modi. But behind the scenes, there was something more significant. Cook's visit is seemingly the manifestation of Apple's decision to put in India on its map. And no, this map doesn't concern the Apple Maps, although to improve that for India, the company is opening a new development centre in Hyderabad. Apple is finally ready to the business in the country the way other technology companies do it.
A bigger team for India
Apple is setting up a new, bigger team that will look after its business here. It is opening, to start with, a development centre where it wants to utilise the talent of Indian engineers. Tim cook has said the centre could employ as many as 4,000 people. Then, it wants to talk to developers making apps for iOS and is opening a new facility to work with them in Bengaluru. Finally, there are all indications that the company hopes to increase the size of its corporate office in Gurgaon. It is hiring more people for this office and by the end of the year could have a big number of employees who are on its payrolls.
The company finally understands that India is a big and unique market that requires the full-scale operations instead of the usual import-a-few-iPhones-and-sell-them-to-rich-consumers.
There are all indications Apple hopes to increase the size of its corporate office in Gurgaon. By the end of the year this office could have a big number of employees who are on Apple payrolls
While Cook met Bollywood stars and watched IPL games on evenings, his days were mostly spent meeting the Apple team in India. The company is looking at all the options, including a better pricing strategy and manufacturing or at least "making" products like the iPhone in the country. It is also getting ready to open its first retail stores in the country, which are expected to come up in Delhi and Mumbai next year.
Two important meetings
Tim Cook met a lot of important people during his visit to India, including Prime Minister Narendra Modi, but his most important meetings were those that didn't get too many headlines. And no, we are not talking about his "meeting" with Lord Ganesha. The most important meetings of Cook were with Reliance Jio executives and Airtel's chairman and CEO Sunil Mittal.
Apple, unlike other phone companies like Google that makes software for Android phones or Samsung, is very different in how it sells phones. One of the reasons behind Apple's big profit in the last 9 odd-years is its tie-ups with telecom operators. The iPhone has done well in every market where it has managed to get the operator tie-ups going and it has done poorly in almost every market where such model hasn't worked. The reason is simple: iPhone is an expensive device, even in the US. But Apple sells it so well because operators absorb the initial cost. They buy the iPhone at the full price then sell it to consumers for $199 or something like that. Rest of the money they recoup by selling data, which a consumer has to buy from them for one or two years of contract that he or she signs while buying the phone.
In India's phones are sold in brick & mortar shops -- and now online -- at their full prices. There is no operator subsidy model here and that makes the iPhone prohibitively expensive for most consumers. Apple can look into ways to price it more aggressively but that would also mean significantly lower margin, something that the company would not like to do.
The company finally understands that India is a big and unique market that requires the full-scale operations instead of the usual import-a-few-iPhones-and-sell-them-to-rich-consumers
The contract model has not worked in India so far. But Tim Cook's visit and his thoughts about 4G rollout in India shows that Apple wants to give it another go. Both Reliance Jio and Airtel are in the middle of rolling out 4G services. And that Apple believes is its chance to kickstart the operator model in India. It is certain that during his meetings with Jio executives and Mittal, Cook must have discussed how the operator model of buying phones can pushed again in India. The Apple CEO doesn't like 4G only because it is speedy. That has no bearings on because 4G is speedy for all phones and not just the iPhone. he likes it because for India this is a new technology and Apple can join in the bandwagon and for partnerships with the operators at a time when they are pushing it to consumers.
Of course, much of this realisation that India is important is self-serving. Apple's traditional markets -- the Western Europe and the US -- are saturated. Even in Japan, Hong and China, the sale of the iPhone is no longer rosy. India is a big, and untapped, market for Apple. But it is also unique. To do the business here, Apple has finally realised that it needs to be here in a way that India accepts and recognises.
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