Apple will soon see the benefit of years of work in India

Apple’s efforts to unlock the market potential of India are about to realize real benefits...

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Apple’s painstaking efforts to unlock the market potential of India seem to be releasing the pent-up demand that exists there for its products.

Reaching people where they are

India’s market protectionism has been a big problem for Apple until relatively recently. Apple has worked closely with government agencies to try to find ways through these economic challenges.

It has invested in a major development hub at which it developed many of the huge improvements in Maps it is currently rolling out. It is manufacturing iPhones in the country, and recently supported the launch of a major Apple Premium Reseller store in Mumbai, India (the first of several planned openings, including in Bangalore and Delhi).

The reseller is offering a deeply Apple-like store experience, which provides the approximately 18 million people who live in Mumbai a chance to try the Apple products they’ve been reading about.

Apple is also hoping to open its own retail outlets there, but India’s 30% local sourcing rules have impeded this, hence the decision to work with partners.

The ship seems to be turning around

Along with signs of government support, the Apple’s efforts are driving growth in its business in India.

Speaking during a recent financial call, Apple CEO, Tim Cook, noted double-digit YoY revenue growth in the country, with iPhone shipments climbing 19 percent.

"India bounced back. During the quarter, we returned to growth there. We're very happy with that," Cook said.

What’s interesting is how the nature of those shipments has also changed:

Counterpoint Research claims that around 40% of Apple’s iPhone revenues in India were previously generated by iPhone 6 sales.

But the researchers also say the decision earlier this year to knock around $240 from the cost of the  iPhone XR helped that model become Apple’s best-selling device, contributing half of all iPhone shipments there.

“These trends suggest that if Apple gets the pricing right in emerging markets, there is a pent-up demand for iPhones,” explained Counterpoint.

There's certainly a lot of people already exploring the opportunities of the iOS economy. Apple has previously said that Indian app developers have built almost 100,000 iOS apps and that the iOS app economy already contributes an estimated 740,000 jobs.

Green shoots of change

Speaking on a visit to India in 2016, Apple CEO Tim Cook observed:

"The truth is there's going to be a lot of people [in India] and a lot of people in the middle class that will really want a smartphone, and I think we can compete well for some percentage of those.”

Since then Apple’s market share in India has certainly been eclipsed by local and Chinese brands – but the recent success of its new iPhone XR pricing strategy hints that Apple is now reaching more consumers.

(Bear in mind the average cost of a smartphone in the country is around $158, according to IDC.)

Cost may be an issue, but as Apple diversifies its platforms and develops products suitable for the post-PC, post-smartphone era, it will find multiple ways to stimulate interest there.

Then there’s the movies…

Bringing Bollywood

Services will certainly be part of the company’s attempt.

Worldwide over half of TV viewing is expected to take place on mobile devices by 2022. Some places are more mobile than others-- Netflix recently said members in India watch more content on their mobiles than anywhere else in the world.

While initially focused on the U.S., Apple’s new Apple TV+ and Apple Arcade services can easily be rewired to help build business in India.

With a market as digitally-savvy, Apple would have to be insanely second rate to ignore the opportunity providing entertainment services in India may unlock – which is precisely why it isn't ignoring it...

India’s Eros International owns a vast library of Bollywood content and has 18.8 million Eros Now streaming media service subscribers. The company is suffering a little as Amazon, Netflix and others compete for eyeballs in India, but it has high hopes – and Apple is part of them.

During its recent Q4FY19 earnings call, Eros Digital CEO, Rishika Lulla Singhinformed us that: “With Apple, we are launching, in over a 100 countries, being the only international partner for their new services plan.”

In other words, Apple is bringing Bollywood.

When a plan comes together…

Cracking complex new markets takes time – huge enterprises need to be capable of responding appropriately and sensitively to local market need and must also be prepared to deliver solutions that meet local consumer aspirations. Irrelevance doesn’t win in any market.

With a new approach to price, improving high-level relationships, investments in education, manufacturing, retail and partnerships with key local players, such as Eros International, Apple has built a relevant local business offering for India.

This seems to be what Apple has been pulling together since Cook in 2016 explained: “We’re not here for a quarter, or two quarters, or the next year, or the next year… We’re here for a thousand years.”

Having spent so much time on the plan already, we will see how Apple manages its next steps in the coming 12-24 months.

It seems to be setting out its store appropriately enough. 

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