Apple bets big on India as it opens its first flagship store

Apple Inc. opened its first flagship store in India with its highly anticipated launch on Tuesday. This highlights the company’s growing desire to expand in India, which it hopes will become a potential manufacturing hub.

The company’s CEO Tim Cook poses for a picture with some of the 100 or so Apple fans lined up outside the sprawling 20,000-square-foot store in Mumbai, India’s financial capital. I was. Unique to the city. A second store opens on Thursday in the capital, New Delhi.

“India has such a beautiful culture and incredible energy that we are excited to build on this long history,” Cook said in an earlier statement.

The tech giant has been operating in India for over 25 years, selling its products through authorized retailers and a website it launched a few years ago. However, regulatory hurdles and the pandemic have delayed plans to open a flagship store.

The new store is a clear signal of the company’s commitment to investing in India, the world’s second-largest smartphone market, where iPhone sales are growing steadily, said Jayan Skola, an analyst at technology consultancy Convergence Catalyst. says Mr. The store “shows how important India is to the company now and in the future,” he added.

India’s sheer size makes the market particularly promising for the Cupertino, Calif.-based company.

About 600 million of India’s 1.4 billion people have smartphones, “which means the market is still under-penetrated and the growth prospects are huge,” says Technology Market Research. said Neil Shah, vice president of research at the firm Counterpoint Research.

According to Counterpoint data, between 2020 and 2022, Silicon Valley companies have gained some ground in the domestic smartphone market, taking only about 2% to 6%.

Still, the high cost of the iPhone puts it out of reach for the majority of Indians.

Instead, iPhone sales in the country are booming among upper-middle class and wealthy Indians with disposable income. According to Counterpoint data, Apple controls 65% of the “premium” smartphone market with prices starting at 30,000 rupees ($360).

In September, Apple announced that it would start producing the iPhone 14 in India. The news was hailed as a victory for Prime Minister Narendra Modi’s government, which has pushed the country’s manufacturing ramp-up since coming to power in 2014.

Apple first started manufacturing from India with the iPhone SE in 2017 and has since continued to assemble many iPhone models from India.

Most of Apple’s smartphones and tablets are assembled by contractors with factories in China, but after repeated shutdowns to combat COVID-19 and disrupted the global flow of products, the company has partially began considering the possibility of moving its production to Southeast Asia or elsewhere.

“Large companies were shocked and realized they needed a backup strategy outside China. They couldn’t risk another lockdown or geopolitical chasm affecting their business. bottom.

According to Counterpoint Research, India now manufactures nearly 13 million iPhones each year, up from less than 5 million three years ago. That’s about 6% of all iPhones manufactured globally, a tiny fraction of China, which still produces about 90% of iPhones.

Last week, Indian Commerce Minister Piyush Goyal said the government is in regular contact with Apple to support its business here and plans to source 25% of its global production from India over the next five years. I was.

According to Counterpoint’s Shah, Apple’s challenge is that raw materials still come from outside India, and tech companies either find local suppliers or prefer suppliers based in countries like China, Japan and Taiwan. It means that you need to pull it closer. Promote production.

Still, he is optimistic that this goal could be met, especially in India where labor costs are getting lower and the government is attracting businesses with attractive subsidies to boost local manufacturing.

“For Apple, it’s all about timing. They don’t enter the market with full flow until they feel confident about their prospects. They can see the opportunity here today. It’s a win-win. situation,” Shah said.