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Apple now has more reason than ever to focus on India

Jan 5, 2019 | Emerging Trends, India

Apple has a big reason to come out all guns blazing in India: failure in China.

Going by Tim Cook’s recent memo to employees—published by Bloomberg on Jan. 03—China, which has been its third-largest marketby sales, has come up short against Apple’s expectations. “…our revenue shortfall in Q1 is from iPhone, primarily in Greater China,” CEO Tim Cook wrote.

Analysts suggest the company may have priced itself out of the market where cheaper, attractive options have rapidly come up.

Coupling that with a slowdown in the Chinese economy, traffic to Apple’s retail stores and channel partners in China declined, according to a Jan. 02 investor note by Cook.

Apple has a big reason to come out all guns blazing in India: failure in China.

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Going by Tim Cook’s recent memo to employees—published by Bloomberg on Jan. 03—China, which has been its third-largest marketby sales, has come up short against Apple’s expectations. “…our revenue shortfall in Q1 is from iPhone, primarily in Greater China,” CEO Tim Cook wrote.

Analysts suggest the company may have priced itself out of the market where cheaper, attractive options have rapidly come up.

Coupling that with a slowdown in the Chinese economy, traffic to Apple’s retail stores and channel partners in China declined, according to a Jan. 02 investor note by Cook.

An earlier report in Reuters suggested the Taiwanese electronics manufacturing company Foxconn will begin assembling top-end iPhone models in its Tamil Nadu factory as early as this year. It will invest Rs2,500 crore and create 25,000 jobs along the way.

The India dilemma

Like in China, Apple started off as an “aspirational” brand with hefty price tags that are out of reach for most Indians. However, the country’s middle class is growing and so is its propensity to spend.

Unfortunately, though, India isn’t the brightest spot for the Cupertino-based company so far. Apple has been battling a substantial slowdown in revenue in India. In the fourth quarter of 2017, business in India was flat owing mostly to a weak rupee.

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“For Apple, the struggle will be to contend with the falling demand of its phones with corresponding hikes in prices,” Rushabh Doshi, an analyst at Singapore-based market research firm Canalys, told Quartz. “India is one of the most expensive countries to buy an iPhone. Apple making it even more expensive, due to currency fluctuations, will only make it less appealing.”

Shipments for iPhones have taken a hit, likely due to their unaffordability. In 2016, the government nipped Apple’s hopes of selling more affordable refurbished goods, given the country’s out-of-control e-waste crisis. Then, in February 2018, India hiked customs duties on iPhones to 20%. Apple’s share in the world’s second-largest smartphone is down to a mere 1%.

Besides, competition is stiff in the region with Shenzhen-based OnePlus and South Korean firm Samsung gaining a lead.

Unlike China, where Apple has set up 50-odd retail stores, India does not have a single one yet.

The firm has been trying to push down prices by manufacturing devices locally—an attempt it seems to be continuing with going by Wistron’s recent push—but Indians aren’t really fond of the cheaper, older, and smaller models. Eventually, Apple may need to go back to the drawing board and chalk up a whole new India strategy.

Article Source : qz.com

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