Could be relooking at the operator subsidy model
“India is incredibly exciting. The population of India is incredibly young. Almost half the people in India are below 25. And so I see the demographics there also being incredibly great for a consumer brand and for people that really want the best products.”
Apple CEO Tim Cook was bang on the buck when he said this earlier this year. We have had signs that the market for its flagship mobility products is maturing, something reflected in its revenue drop during Q2 of 2016. What this means, of course, is that new growth markets like India are something that Apple, like most other tech players, needs to conquer.
During his four-day trip to India, there were the mandatory meetings with biggies right from the Prime Minister to telecom CEO’s. There were however no massive investments announcements like in China where it announced a $1 billion investment in Chinese ride-hailing service Didi Chuxing.
But there were many long term announcements made. For one, Apple announced its first development centre in Hyderabad to work on Apple Maps. They teamed with Noida-based global IT services company RMSI to provide development expertise and software for geo-spatial services. Interestingly, Hyderabad was chosen to set up its map development centre as the city had the largest number of engineers in India specializing in mapping.
Cook also announced that Apple would establish a Design and Development Accelerator facility in Bengaluru in South India. As he put it, “India is home to one of the most vibrant and entrepreneurial iOS development communities in the world. With the opening of this new facility in Bengaluru, we’re giving developers access to tools which will help them create innovative apps for customers around the world.”
Perhaps the most important of Cook’s meetings were those with chief executives of Reliance Jio and Airtel’s, two of India’s biggest telcos. The iPhone’s profitability is based around the operator tie-ups across the world, wherein operators absorb the initial cost of the phone and recoup the rest by selling data. In India, there is no operator subsidy model, making it very expensive for most consumers. Given that both Reliance Jio and Airtel are in the middle of rolling out 4G services, what Apple could possibly be looking into mixing 4G services with an operator model of buying Apple devices in the country.
We also have a rumor that Apple is getting ready to open its first retail stores in India, with stores opening in Delhi and Mumbai early next year.
The Indian market is a rather unique one, given its vast variety of consumer segments and tastes. And in many ways Tim Cooks’ visit had a certain flair, right from his watching IPL cricket matches, having dinner with Bollywood superstars and starting off his India trip with a visit to the Shree Siddhivinayak temple in Mumbai. The larger question is whether Apple can enable its business practices to that of a multi-cultural TG with very varied wants and needs.