Smartphone shipments may be sputtering in the U.S., Europe and other mature markets, but in India, theres the prospect of a billion new device sales. Its probably no surprise then that Apple Inc. Chief Executive Officer Tim Cook is making his first trip to the country.
Cook, who begins his multiday visit on Wednesday, will unveil a development center for digital maps in Hyderabad and introduce an accelerator program for iOS developers in Bangalore, a person with knowledge of the trip said. Apple is pushing to open its first retail stores in the country, though its not clear whether any discussions will be part of the CEOs agenda on this trip.
The prize is more than 1 billion in smartphone sales in the next five years, according to researcher Counterpoint. As Chinas market becomes more saturated and people across the globe upgrade their smartphones less frequently, Apple, Samsung Electronics Co. and other vendors are keen to sell to Indias middle class, which is projected to quadruple to 200 million by 2020. Signs of this explosive rise in consumption already emerged in the first three months of this year, when Apple reported that shipments in India grew 56 percent, even as iPhone sales declined globally for the first time ever.
Im encouraged by the results that were beginning to see there, and believe theres a lot, lot more, Cook said on Apples latest earnings call. I view India as where China was maybe seven to ten years ago from that point of view, and I think theres a really great opportunity there.
Apple didnt immediately respond to a request for comment on the mapping center and accelerator.
Cooks visit highlights the challenges Apple already faces in India, where its prices are far beyond the reach of average consumers. The company isnt among the top 10 in terms of smartphone market share, according to Bloomberg Intelligence analyst Simon Chan. Samsung leads the market, followed by Micromax Informatics Ltd., Lenovo Group Ltd. (including Motorola) and Intex Technologies (India) Ltd. Apple has sought to import and sell refurbished iPhones in the country, but is facing stiff opposition to the proposal.
Mr. Cook is certainly going to come with an agenda, said Vishal Tripathi, a research director at Gartner India. High on that list is permission to open Apple Stores in India, bring up the closed chapter of importing and selling refurbished phones in the country and also explore whats in it for Apple if it brings assembly and manufacturing to the country.
The CEO is planning to meet Prime Minister Narendra Modi, although that schedule hasnt been finalized because the results of several Indian state assembly elections are due this week, said the person, who asked not to be identified as the information is not yet public.
There is a massive opportunity for every player in the mobile value chain when the second largest market by volume is still under penetrated and growing, while the rest of the world smartphone demand has waned, Peter Richardson, Counterpoints research director, wrote in the report. India is the next China.
Apple has a network of 33 stores in China, which made up a quarter of the companys revenue in the latest quarter. Cooks trip to India comes on the heels of a deal struck in China this month, where Apple is investing $1 billion in car-hailing app Didi.
One key hurdle facing Apple in India is price, according to BIs Chan. Indias consumers arent willing to pay as much for the gadgets in a market where phones are typically bought outright and arent available on calling plans. While Apples most affordable smartphone, the iPhone SE, starts at $399, the average selling price for a phone in India is projected to decline to $102 by 2018 from $135 in 2014, according to IDC, less than half the global average.
IDCs smartphone sales figures from the latest quarter also underline how nascent Indias market remains, and how much more it has to go to reach the lofty projection for 1 billion in shipments in five years. Vendors sold 23.5 million phones in India in the period, a rise of 5.2 percent from a year earlier.
The catch in India is that the customers are very price sensitive, Chan said. If you think China is cheap or low end, then India will be even lower.
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