For Apple fanboys in India there seems to be some good news. According to a report in Economic Times, Apple could launch its own stores in India. The report quoted two top executives who say that Apple could look to launch stores in India if the government allows its IT outsourcing operations in India to be included as part of the mandatory 30 per cent local sourcing requirement, the two executives said.
As of February 2012 Apple was outsourcing software application development and maintenance work to Indian software companies to the tune of nearly $100 million.
Although Apple refused to confirm the report officially - “We don’t comment on rumours and speculation,” a company spokesperson has told ET.
This isn’t the first report this year to state that Apple will be opening retail stores in India. Earlier in January, BGR reported that Apple was set to enter the Indian market but then CEO Tim Cook rubbished the reports.
Later in July, at the company’s official earnings call, Tim Cook emphasised that, “I love India but I believe that Apple has higher potential… in some other countries. That doesn’t mean we’re not interested in India — we are. We’re going to continue putting some energies there, but in the intermediate term there will be larger opportunities elsewhere.
While news of an Apple store is welcome, it needs to be remembered that for Apple, India has never been a key country of focus. But as far as numbers suggest, Apple’s indifference to India might not be entirely due to snobbery. We, take a look at some numbers that might reveal why that Apple might be right in pursuing a wait-and-watch approach.
iTunes: When Apple rolled out its iTunes online store in June this year for Hong Kong, Taiwan and 10 other Asian countries, India nor China were on the list. This could be due to the problem of rights management as far digital content is concerned in both India and China.
The iTunes store with its music, podcasts, videos is a key part of Apple’s business .
iPhone share: This Wall Street Journal article points out that according to research firm IDC, as far the iPhone is concerned, Apple’s market share of handsets in India is 1.2%. The clear leader in the Indian market is Samsung which has 51 percent of market share.
The WSJ report also mentioned that Apple sold around 100,000 phones in India in the first six months of 2012, much lower than China, where it sold 2.3 million in the second quarter alone.
In fact according to the IDC report India has the lowest smartphone market penetration, some 2.5 percent at the end of August 2012, which will only grow to 8.5 percent by 2016. When one looks at these numbers, it’s evident that India certainly doesn’t have the largest growing smartphone market in the world.
Also as Firstpost reporter Arlene Chang pointed out, India’s telecom operators are not too keen to promote the iPhone in India. In the US, Apple has teamed up with several carriers to provide the iPhone at much lower rates, but in India the trend has not yet caught up.
Internet users in India: India’s Internet users only number about 100 million whereas China has 531 million Internet users. While India is ranked third when it comes to Worldwide Internet users, the point is that only 10 percent of India’s population has access to Internet.
Also as far as mobiles are concerned, IDC says that the hope is that the popularisation of 3G, and in later years 4G, to drive smartphone uptake as operators roll out more affordable data plans and generous subsidies while expanding offerings to tier 2 and tier 3 cities. The affordability of service plans will be another important key to smartphone adoption in India.
With a high-end smartphone device, India also needs faster Internet services and not just in major cities like Mumbai or Delhi, (even here service is often erratic), but also in second tier cities and upcoming cities.
The Internet numbers matter especially for Apple as its prized products such as iPhone and iPads are also linked to online content consumption.
iPad isn’t the king: Nor is Apple leading the tablet supplier in India. According to this report Samsung has almost double Apple’s market share as far as tablets are concerned. The iPad is the leading tablet in the world but not in India, a number that can’t be overlooked easily.
An Apple Store in India would signal a big change especially as Apple is one of the world’s most valued brands. It could also herald a buying behaviour that would enable Apple to expand quickly and eat in Samsung’s enormous market share. But for now the numbers indicate that India might not yet make the cut.