Apple bites India
Lhendup G Bhutia | 16 Nov, 2017
AS THE CLOCK APPROACHED 6 pm and people the world over stood in snaking queues, hands trembling in anticipation for what was hailed as ‘the future of the smartphone’, iPhone buyers in Delhi stood in line on red carpets with velvet ropes, large men in black blazers patrolling the sides to maintain order. Some customers, it turned out, had driven down from nearby cities like Dehradun, fearful that their local stores would not be able to honour the promise of delivering the phone on the first day. Others, equally enthusiastic but less fond of physical exertion, stood in front of the ghostly lights of their computers, fingers on the keyboard. And in Mumbai, one man, Mahesh Paliwal, climbed atop a horse, with a baaraat of drummers in tow, to go collect his iPhone X.
When the appointed hour arrived, within minutes websites crashed, shops put up ‘sold out’ signs, and people got into arguments. Eventually, most left disappointed to return again on another day to stand in another queue. Among them was Omar Munir, a 22-year-old law student from Kanpur, who did not get his phone, despite having booked one in advance. Since then, he has been tweeting to Tim Cook every few days to resolve his issue.
Elsewhere, in Mumbai, another dejected buyer, Yogesh Singh had spent much of the year preparing to buy the iPhone X—ever since, he says, rumours of its design and features first surfaced online. Singh was ecstatic when he watched the iPhone X’s launch event; for the first time, much of the advance hearsay of an iPhone’s design, features and price had proven true. “I knew there was going to be a rush, but I didn’t expect this,” he says. “I was there online, but I was like five minutes late [to buy the phone]. And can you imagine, it was all sold out.” Singh did manage to place an order a few days later, but the phone is yet to reach him. He has been on the phone everyday with the support staff of the sales portal.
In comparison, Paliwal was lucky. Despite not having pre- booked the device, he was able to convince a mobile store owner to keep aside the most expensive version for him, the 256GB iPhone X, which costs Rs 1.02 lakh in India. If this favour were granted—and it wasn’t really a favour because Paliwal and the store-owner are close friends and the former invariably purchases every new model from the same store—he had promised the store owner, he would pick the device up in style with a traditional bridegroom’s baaraat. By the time his procession reached the venue, and Paliwal had taken the phone and dismounted his mare, a large crowd of passersby and local TV reporters had gathered. He felt so giddy with exhilaration—thanks to either the fanfare around him or the glee of holding the device at last, he is unsure of which—that he had to sit down alone for several minutes and recover his breath.
Paliwal’s actions are just the sort of over-the-top gestures you would expect from a loyal Apple fanboy. And it will please the Cupertino-based tech major because it comes at a time when the most-valued company in the world is finally trying—after decades of neglect—to establish a full-fledged presence in the Indian market.
Apple’s relationship with India began early, even before the company came into being, when a penniless young man called Steve Jobs arrived in India in search of enlightenment. He returned disappointed, save for meditation skills, and instead acquired lice, scabies and dysentery, as his biographers tell us. In the years since then, India has been an unimportant market for Apple. Its products were rarely launched here, or often far too late. In 2006, when Apple opened its only India office in Bengaluru, Jobs shut it down after only two month citing poor service. But the cult of Apple, despite its neglect of this market, grew here too. It had avant garde appeal among a rarefied set, but once the smartphone boom got going, perceptions of the brand began to transform from a maker of exquisitely crafted tech products for the uber-rich to an aspiration for everyone.
In the last two years, with poor growth in the Western and Chinese markets, and India’s teeming millions moving up to smartphones, a succession of top Apple executives have been arriving in India to crack the market. Apple’s CEO Tim Cook, on his visit last year, did all the things that signals serious intent: he visited a temple, watched a cricket match and attended a Bollywood party. Apple has since then set up a large office in India. It has put in place an assembly unit in Bengaluru for its iPhone SE and begun to work closely with independent iOS app developers and other tech companies. It has a team in India to look into Apple Maps, and also, according to reports, asked the Government for tax exemptions for itself and its suppliers for the mass manufacture of handsets, along with permission to open its famous Apple Stores. This looks more probable now, with the Chinese smartphone company Oppo being granted an okay last week to open its single-brand retail stores.
Globally, Apple is likely to never experience the kind of high sales it was once accustomed to with the iPhone. The market in the West is mostly saturated. Those who want an iPhone there already own one and upgrades to newer iterations will not make for large jumps. For several years, the vast smartphone market of China appeared a bright spot, especially after Apple inked a deal with the carrier China Mobile in 2013. But the market is now in decline there too. Squeezed in with the emergence of other manufacturers making equally good but cheaper phones, Apple’s China sales across all products have fallen sharply. According to the research firm Canalys, the iPhone suffered six consecutive quarters of declining sales in China. Apple’s overall revenues in the region have followed the trend, falling by double digits every quarter over the same period. Apple broke its downward streak in the most recent quarter, helped by the launch of the iPhone 8, but according to Canalys, the spurt is unlikely to sustain through year-end. This has led many to argue that Apple is in the throes of a ‘peak iPhone’ syndrome. That the cultural domination of the phone is over, and from now on, it’s all downhill for this revolutionary device.
The company has set up an assembly unit in Bengaluru to put together the iPhone SE. It has begun to work with iOS app developers, set up a team to look into Apple Maps, and asked for tax exemptions for itself and its suppliers to start manufacturing phones here
India is thus increasingly the big hope for Apple, it seems. The latest report of the global advisory firm International Data Corporation’s (IDC) shows just how rapidly the Indian smartphone market is growing. Shipments in the third quarter reached a record high of 39 million units, up 40 per cent over the previous quarter. This consists of the Diwali period when sales tend to spike. But even when compared to the same period last year, the growth was a substantial 21 per cent. Indian sales account, for the first time, 10 per cent of the world’s smartphone volumes. “Apple right now needs India more than India needs Apple,” says Navkendar Singh, a senior analyst at the global advisory firm IDC’s India office, Apple’s progress here is under Cupertino’s watch. Tim Cook mentioned the expansion at a recent earnings call, when he said, “Revenue from emerging markets outside of greater China was up 40 per cent, with great momentum in India, where revenue doubled year over year.” According to Canalys, Apple shipped more than 900,000 units here in the third quarter this year, more than double the number in the same period last year.
Despite those upbeat figures, Apple’s share of the Indian market in unit terms is still small. According to IDC, Apple accounts for only two of every 100 smartphones sold. Tarun Pathak, an analyst with Counterpoint Research, also points out that it’s Apple’s older generation phones that sell most in India.
But if one were to look only at the premium segment, which according to Navkendar should comprise of phones that cost at least between Rs 40,000 and Rs 43,000, “Apple and Samsung are the leaders here, and they are neck and neck.” According to Pathak, this premium category, although likely to be small, is expanding its share of the pie. In India’s smartphone market, people are constantly moving up the value escalator. Millions may be getting in for the first time with a cheap Android phone, but those on this slot before them would buy a fancier Android phone, even as those who had one go for an even more desirable device, with the iPhone right on top. “Whatever may be its market share, the iPhone is the dream phone here,” Pathak says. “It is an aspirational product. You ask 10 college kids randomly what phone they want, and nine out of l0 will say ‘the iPhone’, even if they may not be able to afford it.”
The biggest challenge Apple will face in India, according to analysts, is expanding its reseller base and strengthening distribution channels. “To grow, Apple will need to identify and target tier 2 and 3 cities. There is a large aspirational consumer group in these markets. And Apple will have to find a way of reaching these markets too,” Pathak says. “Also, a lot of smartphone sales in India, especially in smaller towns and cities, happens offline. So expanding distribution there will be crucial.”
Apple is already doing that. There is talk that it will be coming up with an increased number of Apple- authorised reseller locations across the country by next year. Its proposal of opening Apple Stores is also likely to come through. “Apple has been viewed as a luxury product without it doing much here. But once these things come into place, once the whole famed Apple ecosystem takes shape, that’s when Apple will be really able to differentiate itself from competition as a luxury product,” Navkendar says.
Apple competes in the premium category, but it has also managed to challenge cheaper phone players, analysts point out, by effectively using a multi- channel approach to compete with them. “So you have [Apple] selling its premium phones at expensive rates. But they have been using other channels, like online, to sell their older generation models at cheap rates, and sometimes exceptionally cheap with flash discounts on ecommerce platforms,” Pathak says. Navkendar points out how earlier this year, there were many portals asking people to upgrade to an iPhone 5S. “Upgrade to a phone released four years ago,” he says, “imagine.” That’s India.
PALIWAL, NOW 21 years old, doesn’t recall when he first acquired a phone, but he remembers it was the iPhone 3G, the second generation iPhone, and that he was still in school. “I would have to keep it at home all day when I was in school. And I would spend the rest of my time, the entire night, with it,” he says. Since then, Paliwal has developed an insatiable appetite for Apple’s products, running his way through almost all its new phone iterations—3G, 4, 4S, 6 Plus, 7 Plus, 8, and now X—often insistent that he acquire it on the first day of its India release, and earning in the process a poor reputation in his father’s eyes: “He is always dismissing me as someone who changes his phones every month.” Paliwal follows all Apple rumours, he doesn’t miss any of its Broadway-like product launches, grows ecstatic whenever he learns of new iPhone changes (the missing headphone jacks in the iPhone 7, the missing home button in iPhone X), and he even acquired the first generation Apple Watch some years ago.
There is talk that the company will be coming up with an increased number of Apple-authorised reseller locations across the country by next year. Its proposal of opening its famed Apple Stores is also likely to come through
Earlier, his parents and relatives would chip in. But now he funds this obsession by saving (he works in his uncle’s menswear retail outlet), or by using the money he makes off chit funds. Even though he knew he would purchase the iPhone X, he went ahead and bought the iPhone 8 on September 29th, again the first day of its domestic release. “I had bought almost all the versions so far. And I got someone who was ready to buy it second- hand from me for Rs 50,000 (Paliwal paid Rs 64,000 for it.) So I thought I should just go for it.” So why did he go for the X? “Oh, I had to,” he says. “This is the biggest change in the iPhone since the 6 Plus. Maybe even since the first iPhone.”
Paliwal is not your typical Indian smartphone consumer. According to market watchers, both the iPhone 8 and iPhone 8 Plus models got a tepid response in India. “It looked like everyone held back to buy the iPhone X,” Pathak says. “The X has turned out to be a big hit so far. Every model got sold out so quickly.”
The X represents the most radical redesign of the iPhone in many years. In a country where an iPhone can denote one’s status, a new model could fail to attract attention if it looks identical to its previous iteration, as it has been for the past few years with iPhone’s 6 and 7 versions or 5 and SE versions. It then loses its snob value. “But this phone is so different and so beautiful,” Paliwal says. “It looks like no other iPhone.”
ALVIN VARGHESE IS an iOS app developer. Earlier this year, he developed and released an app called Single Clock on Apple’s operating system. The app essentially notifies users, even when they move to a different timezone, of their reminders at the appropriate time. The app was priced $0.99. In the last four months, Varghese has earned more than $350 on user downloads. Varghese has also developed and released the app on Google’s Android mobile operating system, but it hasn’t logged a single download at Google Play Store. “There are many things good and bad about Apple and Android. But to an app developer, the iOS represents the best way to monetise their product,” he says, “The platform and its users have a very different mindset.”
Varghese also says that just like its user interface for consumers, Apple’s platform is far smoother and more comfortable for software developers than Android. “For Android, you have to develop products that support a high number of devices with varying specifications. There will be a lot of debugging. In iOS, I feel, it is a breeze,” he says.
For a long time, Android was such a dominant operating system for smartphones in India that almost all app development for the local market was geared for it. Apple iOS developers have always been a small and fragmented group. Android app developers are better connected. Tech giants like Google and Facebook have been active in this sphere and have kept them engaged via workshops and other events.
But as Apple begins to expand in the Indian market and the company reaches out to the local developer community, things appear to be changing. Earlier this year, Apple established its app accelerator programme, where in free and open-to-all sessions, the company helps developers come up to speed with the newest technologies. According to Yogesh Singh, through these sessions, Apple helps developers improve their apps and points them to the latest trends in the field. Here, Apple has been asking developers not just to build apps for foreign audiences, but to also focus on the local market. “It’s a really good thing. It will help strengthen and establish the developer community here,” Singh says.
As Pathak points out, Apple is not just interested in selling phones. “It is interested in establishing an entire ecosystem, and wants to control everything from the pre-planning stage of buying a phone—and here the Apple stores come in—to buying services in [the Apple] experience [like its iCloud and music services, App Store, etcetera),” Pathak says. “So it’s no surprise that apart from wanting to sell more phones, it also wants to help the local app scene grow.”
Varghese, who attended one of these sessions, wasn’t particularly impressed by it. He says a lot of the matter, at least in the session he attended, was already available online. But in the last two years, Varghese has, on his own, formed a group called Swift India (named after Swift, the new programming language in iOS) and has been organising meet-ups and discussions with other independent iOS developers. Later this month, along with Try! Swift, an international body of iOS developers that holds conferences, Varghese is hosting a two-day-long conference in Bengaluru, billed as the first of its kind, where speakers from across the world will address local iOS developers.
Apple has also begun working closer with companies using the iOS platform. “We were invited just two weeks ago to have a one-on-one meeting with Apple executives,” says Singh, who works as a lead iOS engineer at Haptik, an AI-based personal assistant service on Android and iOS devices that can do a number of tasks from setting reminders to booking tickets for movies or theatre shows. “The agenda of the meeting was how Apple can help Haptik and they also wanted to understand the Indian ecosystem more.” According to Singh, Apple is hosting such meetings with other large internet companies too.
To many in the world, Apple has fallen into an innovation slump. Every new iteration is pursued with questions about the future of the iPhone, and whether or not Apple will ever be able to design another blockbuster device. The latest offering may or may not be that device. But it already points towards a certain future—to a device with most of its physical presence receding into the background to leave you just a screen, one that requires no earphone or charging cables, and just needs to identify your face to unlock.
Others say that the most interesting technology on its way is in the realm of augmented reality (AR). Last year, we saw its promise with the popularity of Pokemon, a game that layers the physical world with fun elements of digital makebelieve. Apple has already opened up ARKit, a platform for new apps that integrate AR, to software developers. “This is going to be like when Apple launched its app store back in 2008. It’s going to set off a wave of innovation in mobile phones. Google is a long way back in this regard,” Varghese says. Among some of the experiments in this field is one by Ikea, a global retail chain that has reportedly created an app that allows you to place virtual furniture in your actual home to check what it would look like.
These questions, however, are far from the mind of Omar Munir, the law student in Kanpur. He wants the iPhone X, and he wants it now. A few days ago, he sent out another tweet to Tim Cook. By now, it had moved from a gentle lament on the store unable to honour its promise to a harsher message directed against Apple itself. ‘Been two days Apple being Apple the arrogant ass company that it is no response no reply no assistance. Hats off to the world leaders of technology and its chairman,’ he wrote, with a number of unkind hashtags attached. When contacted, Munir says he is very upset but he is not going to cancel the order. “It’s a supply issue, I think,” he says. “But why should I suffer?”
Perhaps with Apple, it is never a supply issue but one of high demand. Even in India.