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Apple CEO Tim Cook's India visit: What is the tech giant planning?

Apple is looking to develop India as a market that will offset declining iPhone sales elsewhere

BS Web Team  |  New Delhi 

Apple CEO Tim Cook (File photo)
Apple CEO Tim Cook (File photo)

Apple's chief executive officer Tim Cook is coming to India this week, his first visit to the country since he took over that position at the iconic Cupertino-headquartered company, and will meet Prime Minister Narendra Modi over the weekend. A government official has confirmed that a meeting between Cook and Modi has been fixed for Saturday, May 21.

Cook is also expected to visit Bengaluru and Hyderabad, both leading technology centres in the country. Apple has already announced it will set up a development centre in Hyderabad, starting with about 150 people who would help with the development of maps.

Why visit India?

Apple is looking to develop India as a market that will offset declining iPhone sales elsewhere, a trend which surfaced in the January-March quarter of this year.

Sales in China, its second-largest market after the United States, fell 11% in the latest quarter; in India, however, iPhone sales were up 56% from a year ago, notwithstanding it's tiny share of the smartphone market here due to the high prices of its devices. Nine out of 10 smartphones sold in India cost between Rs 5,000 and Rs 15,000, whereas Apple's cheapest smartphone - iPhone SE - was launched in the country at Rs 39,000.

Not surprisingly, Cook earlier this month said Apple would be "really putting energy" in India.

Describing India's potential, Cook, in a conference call with investors, said: "Because the smartphones that are working there (India) are low end, primarily because of the network and the economics, the market potential has not been as great. But I view India where China was seven to 10 years ago. From that point of view, I think there's a really great opportunity there."

Despite a slowdown in smartphone sales globally, in the first three months of 2016, sales of smartphones in India grew 23% to 24.9 million units.

What does Apple have in the works?

During his current stay in the country, Cook is also likely to announce the company's plans to manufacture iPhones locally.

The company's largest global manufacturing partner, Foxconn, has already signed a joint-venture with the Adani Group to manufacture Apple products in the country.

The plan to manufacture the premium devices locally goes hand in hand with Apple looking to set up its first retail, brand-owned outlet in the country.

In fact, in April, a government panel had recommended exempting Apple from mandatory local sourcing norms, a move that would pave the way for it to open single-brand retail stores in the country.

Cook's visit also comes shortly after India rejected Apple's request to import and sell refurbished iPhones.

Apple's rivals had mounted a public campaign against the proposal, arguing that such a move would trigger a flood of used electronics and defeat the government's 'Make in India' scheme, which is aimed at boosting domestic manufacturing.

Given that the company typically doesn't lower prices in order to maintain its premium image, selling refurbished phones was seen as a move that would appeal to price-sensitive consumers.

Another hurdle faced by Apple, in Cook's own words, is infrastructure.

In April this year, Cook had said that while India presents a "really great opportunity" for Apple, slow networks and the informal retail structure in the country were preventing the tech giant from realising its full potential.

Cook had said that while India is the third-largest smartphone market in the world, it is dominated by "low-end" smartphones primarily because of the network and the economics due to which "the market potential has not been as great there".

First Published: Tue, May 17 2016. 10:12 IST