All About Apple's Ascent in India

Recently, Apple was in the news in India for two reasons. First, for reshuffling management and putting a bigger focus on India by making it an exclusive sales region. And second, when it lobbied for the liberalization of labor laws in the Indian state of Karnataka, along with its supplier, Foxconn, for a flexible working regime, which is crucial for building effective manufacturing at scale. These recent developments and global slowdown make a case for analyzing Apple's journey in India and why it wants to make the most of the world's fifth-largest economy.

How is the Indian market standing out?

The Indian premium smartphone segment, categorized as ~USD400 (INR30,000), has gained significant traction recently. In 2022, the segment claimed a 55% growth, faster than the overall smartphone market. Amongst the selective manufacturers of the segment, Apple witnessed strong growth and success in iPhone shipments, with two million iPhones shipped in Q4 2022. Moreover, according to IDC, iPhone was the third most-shipped smartphone in the Indian market in Q4 2022. Apple became the top 5G smartphone brand in the premium segment in 2021, carrying the same momentum across 2022.

The Indian market significantly contributed to global sales of iPhones, which increased by 10% and stood at USD42.6 billion for the July-September quarter of 2022.

What is fuelling Apple's growth?

Apple's products, specifically the iPhone, have been a premium product in the Indian market since its entry in 2007. Due to the high price tags, it was portrayed as an aspirational brand with a limited customer base. The company leveraged its position and converted it into a value proposition by providing five years of support to iPhone owners, unlike their Android-enabled counterparts. Apple continued to harness the potential customer base in the Indian market by providing financial incentives and options for its products, which acted as a catalyst for growth. It created alliances with financial institutions (such as ICICI Bank, Axis Bank, and Tata Capital) and FinTech startups, such as ZestMoney, that enabled buyers to avail of discounts and other financial incentives. This became one of the significant drivers of iPhone sales in India, even with the higher Average Selling Price compared to Android competitors.

The ecosystem Apple has established and managed by incorporating its devices is another critical factor in customer retention and business expansion. The exclusivity of the operating system (iOS) and seamless communication between devices (such as smartphones, laptops, AirPods, smartwatches, and desktops) contribute to a unique user experience. Further, its in-house developed applications such as iTunes, FaceTime, and others assure customers of data privacy, thus boosting Apple's brand value and customer loyalty.

Over the last few years, a slow-yet-steady transition of users from Android to iOS has been recorded. Simultaneously, Apple has made several investments in organizing its sales channels to gain more visibility and penetration in the market. For instance, the first online store in India was launched in September 2020. This played an important role in gaining customers' confidence in the authenticity of Apple's services. In December 2022, Apple initiated talks with Tata-owned Infiniti Retail, which runs Croma stores, to open 100+ Apple stores nationwide to scale up the sales volume for iPhones and other products. Moreover, experts attribute Apple's growth to its aggressive promotions and discounts, especially during the festive seasons.

How are telco partnerships benefitting the company?

Partnerships with telecom service providers such as Bharti Airtel, Vodafone Idea, and Reliance Jio is instrumental in improving market penetration and in having support in the following areas:

Customer outreach: The significant presence of retail stores across cities and towns allowed Apple to improve visibility through product display and reach out to potential users.

Improved data plans and packages: Telecom providers bundle different offers, such as talk time/data packs for customers and financial incentives (such as EMI offers). For instance, Apple's partnership with Vodafone Idea enabled the latter to provide cashback offers for its postpaid customers on purchasing iPhone 13.

Better 5G rollout plans: Apple introduced iOS 16.2, in October 2022, to enable 5G support for the latest 5G compatible iPhone models operated by carrier networks such as Airtel and Jio in India, to offer customers upgraded and latest 5G connectivity and network.

Also, in November 2022, Jio's sister concern, JioMart, introduced cashback offers applicable for select cards on the purchase of iPhone 14.

What new developments are on the anvil?

Apple's growth in the past two-three years has been significant in the Indian smartphone market. With its existing production facilities in India, the company plans to expand its operations to gain market share, market the Make in India label, and gain customers' confidence. Moreover, the recent announcement by the Indian government to reduce customs duty on smartphone components is expected to reduce the production costs of smartphones. Also, the company is in active discussions with the government to commence the production of its other products, such as the iPad and MacBook, to promote its presence.

Apple's new focus on local production and sales structure rejig, along with the existing finance schemes, offers, and telco partnerships, underlines the growing importance of India. Moreover, the premiumization trend in India got a push in the post-pandemic era, encouraging aspirational brands such as Apple to stay bullish.