Author(s): Raghu Gopal
Last week, Apple's CEO Tim Cook, on his first visit to India, announced two major initiatives that will attempt to tap into the software talent of the country.
Identifying India as a major growth market, Mr Cook announced Apple's first app development accelerator in Asia. The facility, to be called the Design and Development Accelerator, will be opened next year in Bangalore. The goal is to support Indian developers to hone their skills on best practices and improve the design, quality and performance of their iOS apps.
Mr Cook also announced the planned opening of Apple's development office in Hyderabad, which will focus on the development of maps for Apple's products. The investment should allow Apple to be more competitive against rival map platforms.
Apple said its experts will lead briefings and provide one-on-one app reviews for developers. The company will also give developers "access to tools which will help them create innovative apps for customers around the world," and also provide support on Apple's Swift programming language.
There's no doubt Apple faces a number of hurdles in India. Android is the dominant mobile platform in the country with about 95 percent market share, thanks to affordable pricing. Developers in India have every reason to make Android their priority and will almost always roll out any new apps on Android first before considering offering an iOS version. At the same time, iOS is an attractive platform for developers given the higher purchasing power of its customers. iPhone users are also more likely to retain apps for a longer period of time, unlike Android users who frequently delete apps to save on memory.
India is a key battleground for all major tech firms, owing to the country's IT aptitude and its growing online population. Bangalore, often called the Silicon Valley of India, has a large number of developers working in research and development centres of major multinational corporations such as Amazon, Honeywell, IBM, or in start-ups like Flipkart. Apple estimates that more than 1 million people in Bangalore are employed in the tech sector and over 40 percent of graduates from local universities specialize in engineering or IT-related disciplines.
We note that recent initiatives by Apple in India have been met with trouble from the beginning. First, Apple was banned from selling cheaper refurbished iPhones in India. Just a few weeks later, Apple was stopped from opening a series of stores while authorities review this initiative — regulation requires that at least 30 percent of the components in the products sold in single-branded stores have to be sourced locally. Apple is claiming exemption on the basis that its products are "cutting edge" and "state of the art"; the authorities disagree.
The Indian market is different in its regulations, trade policies and cultures. Apple is also going up against some significant local competitors in India, including Micromax and Intex. This changes the market dynamics.
Apple's initiatives for India should provide the company with a greater presence in the country, which could help in its discussions with the Indian regulators. They'll also serve as a catalyst for some device sales. CCS Insights estimates that Apple's market share in India is currently less than 2 percent because of the high prices of its devices.
Given a growing middle and upper class, it's clear that there is long-term potential for Apple in India, but it could take several years for it to gain a significant position. Mr Cook's visit to India was an acknowledgement that Apple needed a strategy shift to meet its potential in the country. As growth in the Western market and China is now exhausted, Apple is turning to India with hope. But it has a lot of challenges to address to tap into this growing market.