When Apple took the Indian bait

CHENNAI: It took Apple around 25 years to open its first two stores in India. Tim Cook, the CEO of the Cupertino-headquartered tech giant said that it was keenly focussing on the Indian market while comparing the current scale of operations here to its early years in China.

The company’s presence in China is so significant that people there refer to Zhengzhou as iPhone City. Its Foxconn factory there produces as many as 5,00,000 iPhones per day. It is the company’s largest single plant for the smartphone, and contributes to more than half of its annual sales.

As far as the enterprise is concerned, India is a critical market worth tapping into — with a 1.3 bn strong population, that includes a significant pool of potential customers, who seek out the company’s aspirational products.

Switzerland and Macau, which are relatively smaller nations than India, already had outlets bearing the company’s brand name.

However, those nations are characterised by affluence, something indicated in how even lower and middle income economies with Apple-branded stores, including Turkey, Brazil and Thailand, boast of per-capita incomes that are several times higher than India’s.

Price dynamics in India work in a different manner as those earning a salary of Rs 25,000 per month, are in the top 10% of the income bracket, which is essentially less than half the price of a brand new iPhone.

Thanks to easy EMIs, gadgets from the company have in many ways helped shatter the illusion of class or social exclusivity as lakhs of middle-income Indians now brandish the same smartphone and smartwatch that hotshot Silicon Valley moguls trust their businesses, and in some cases, their lives with.

India is a price-sensitive market, owing to which a majority of the populace banks upon pocket-friendly Android phones, that remain untethered by Apple’s strict data transfer and file sharing protocols.

It’s why Chinese and Korean smartphone manufacturers hit the sweet spot of form, functionality and affordability (price point) ages before Apple made a dent in India.

But one might be forgiven for thinking that Apple’s branded foray into India was all about building a new customer base.

The company is beginning to pay serious attention to India’s country’s growing role as a global hub for the production of gadgets.

Since 2018, a mixture of geopolitical issues that sandwiched a pandemic in between has prompted many companies to relocate manufacturing as well as supply chains away from China.

Even though Apple relies on China to produce over 90 percent of the iPhones it sells, it has forecast that 25% of its products will be built outside China by the year 2025, as compared to under 5% presently — with India and Vietnam occupying a place of pride in operations in the future.

The company leans heavily on the power of contract manufacturing and it has been making smartphones in India since 2017.

The Taiwanese firm Foxconn, which is the main assembler of Apple’s smartphones, has been manufacturing them at its Sriperumbudur factory on the outskirts of Chennai.

Needless to say, a whole new array of factories and industries, especially those specialising in building semiconductors, as well as advanced technologies will need to come up in India, and push its median wealth index into an upward trajectory before Apple’s aspirational wares fall within the reach of the ‘aam aadmi’.