“India is a very important market in the long term,” Cook said after the company’s earnings report last week. “It’s a challenging market in the short term, but we’re learning a lot. We plan on going in there with sort of all of our might.”
Apple doesn’t break out its revenue from India since it’s such a minor part of the business. In the most recent quarter, the company generated 44 per cent of revenue from the Americas and 18 per cent from greater China. India is lumped in with the rest of Asia-Pacific, which altogether account for about 6 per cent.
Apple has tried in recent years to gain ground as India eclipsed China as the fastest-growing smartphone market in the world. One Apple veteran took over as country chief at the end of 2017, overhauling its strategy and replacing top sales executives. But with little sign of progress, a new country chief was named in November.
Still, Apple continues to flounder in India. Research firm Canalys estimates the company’s shipments fell by more than 75 per cent in the first quarter of 2019, giving it only about 1 per cent of the country’s smartphone market.
Now Apple appears to be doing the difficult -- and expensive -- work of building a foundation for its business. Foxconn Technology Group, its most important manufacturing partner, is running quality tests for the iPhone Xr series in India and plans to begin mass production at a facility in the suburbs of Chennai. Older models are already assembled at a Wistron plant in Bangalore. The increase in local operations should expedite approval for a company-owned store when a new government takes over in India at the end of May or early June, said the people.
“Its own retail store might be just what Apple requires to reinforce its premium image,” said Rushabh Doshi, an analyst with Canalys. “A store just before the next launch will be the perfect timing for Apple to restart its Indian growth story.”
It’s clear Cook won’t give up against Chinese phonemakers that have come to lead the market. “We have made some adjustments in India and we’ve seen preliminarily some better results there,” he said last week during the earnings call.
Indeed, last month Apple ran front-page newspaper ads announcing sizable discounts on the latest iPhone Xr. The phonemaker, which rarely slashes price on its latest models, has offered a markdown of 17,000 rupees ($244) on its latest iPhone Xr, bringing the price down to 59,900 rupees. This week online retailer Paytm Mall announced cash paybacks on a variety of iPhone models.
“The price cuts are definitely a step in the right direction,” said Doshi. “Apple has a delicate balance to maintain: It needs to appeal to the cost-conscious Indian buyers, while ensuring that price drops do not dilute its premium image.”