Apple partners in India to reportedly expand operations with 500 stores
A report on Friday claims Apple has tentatively agreed to a proposed retail expansion in India that will see 500 new reseller storefronts pop up in underserved regions of the country.
Citing a source with ties to Apple, The Times of India reports the Cupertino tech giant is planning a major push into India over the coming months, supposedly in hopes of becoming a more mainstream brand. Currently, rival smartphone maker Samsung dominates the smartphone landscape in the country.
"All this will change now," the source said. "The company is finalizing plans to become a serious player in India, which is being seen as a strategic and one of the most promising markets globally."
Another person familiar with Apple's plans expects iPhone sales to triple in 2015. For the current calendar year running through September, Apple sold approximately one million handsets in India, but the expansion could boost numbers to above three million, the source said.
According to the report, Apple's plans likely involve local distributors Redington and Ingram Micro, which parse out products like the iPhone to Apple Premium Resellers, Apple Authorized Resellers and regional distributors. The new stores may take on a franchise model led by Redington and are said to range from 300 to 600 square feet, a sizable step down from the over 2,000-square-foot outlets currently operating in big cities.
Today's report echoes a similar rumor from March claiming Apple was working to open smaller shops in "tier II" regions of India. Reports at the time said stores would be smaller than 600 square feet and would focus on iPhone and iPad models along with lower-end Macs and iPods. At the time, there was no mention of franchising, as Redington and Ingram Micro were expected to run the outlets.
Citing a source with ties to Apple, The Times of India reports the Cupertino tech giant is planning a major push into India over the coming months, supposedly in hopes of becoming a more mainstream brand. Currently, rival smartphone maker Samsung dominates the smartphone landscape in the country.
"All this will change now," the source said. "The company is finalizing plans to become a serious player in India, which is being seen as a strategic and one of the most promising markets globally."
Another person familiar with Apple's plans expects iPhone sales to triple in 2015. For the current calendar year running through September, Apple sold approximately one million handsets in India, but the expansion could boost numbers to above three million, the source said.
According to the report, Apple's plans likely involve local distributors Redington and Ingram Micro, which parse out products like the iPhone to Apple Premium Resellers, Apple Authorized Resellers and regional distributors. The new stores may take on a franchise model led by Redington and are said to range from 300 to 600 square feet, a sizable step down from the over 2,000-square-foot outlets currently operating in big cities.
Today's report echoes a similar rumor from March claiming Apple was working to open smaller shops in "tier II" regions of India. Reports at the time said stores would be smaller than 600 square feet and would focus on iPhone and iPad models along with lower-end Macs and iPods. At the time, there was no mention of franchising, as Redington and Ingram Micro were expected to run the outlets.
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UPDATE: Well, I did find this which suggests despite their enormous population there are half as many billionaires in India as there are in China, which probably applies also to their millionaire and upper class demographics. Economically speaking, it seems India has less opportunity for their citizens.
http://en.m.wikipedia.org/wiki/List_of_countries_by_the_number_of_US_dollar_billionaires
Maybe it's just me, but I think there is more potential for vast sales in China, versus India. How large is their population of top-wage earners, anyway?
UPDATE: Well, I did find this which suggests despite their enormous population there are half as many billionaires in India as there are in China, which probably applies also to their millionaire and upper class demographics. Economically speaking, it seems India has less opportunity for their citizens.
http://en.m.wikipedia.org/wiki/List_of_countries_by_the_number_of_US_dollar_billionaires
Best to leave no stone unturned in the quest for world domination.
Apple watch may actually see some penetration since folks like to show off what they own, however if Indians don't own many iphones... Why buy one? Indians do love gold as jewelery more than any other group on the planet, maybe they will buy the gold watch.
There are no real tax incentives to buy "tech" in India. In other words no real "write off" for a home computer. On the other hand there is a lot of "black" money (money hidden from the government) as a routine part of any major transaction in India. People use black money in stores so they can get rid of cash which they have a hard time hoarding anyway... Many will use that money for their discretionary funds instead of their "white" money which they paid taxes on.
At this point Apple pay is a total loser since almost nobody uses or trusts credit cards (extreme poor security) in India. Indians would use Apple pay if there were no other credit card in the middle perhaps. The credit card availability problem also translates to less folks who actually use the app store or itunes for purchases.
Most storefronts in India lack a web presence. Many American restaurants (even small ones) now have a web presence with a menu at least, reviews on yelp, etc. Honestly, without all these aspects your smartphone is not that useful
Potential for ecommerce revenue is less due to lack of high speed delivery services of the UPS or Fedex caliber.
Itunes: needs multi-artist tagging capabity for the majority of Indian music or you will have a bunch of pissed off artists. Multi-genre capability is needed. A new "language" tag would also be helpful.
A serious revolution would have to be brought about in India in total software and cloud services as well as general infrastructure, not just in selling a phone. Apple products are more attractive in America for a lot of reasons besides just being good smartphones. That's not to say that the pace isn't fast in India, but it has a ways to go in order to catch up to the US or Japan in this regard.
In many ways, most people use their smartphones like glorified feature phones in India. Even simple features like Airplay are likely getting limited usage.
I hope Apple can "get it done" since potential growth in India is so huge.
Bah Humbug!
Even if you granted that many of these are more or less mall kiosks,
that's more stores than Apple currently has worldwide.
O! The logistics!...partners or not.
The article doesn't really suggest the timeframe for this many openings,
but an expansion on this scale in a country where you aren't currently
that much of a presence, and, in fact, have no retail outlets,
isn't likely to be the sweeping success the article portends.
I disagree with your final statement, which contradicts every statement leading up to it.
An enormous population doesn't automatically equal enormous potential or profits when there are so many cultural and economic barriers.
I think India's 'potential' has been huge for a few decades now. Nothing sustained ever seems to happen.
I am in agreement with SpamSandwich on this one. India is still a few years away for Apple. It's fine to take a limited position, but it's not time for a huge investment yet. Moreover, it'll be nice to have something big a few years down the road as China starts to mature as a smartphone market.
Let the low end folks like Samsung take it now.
It seems like India is just too third world for Apple.
I'd say an enormous population is the very definition of potential, which I distinguish from opportunity which has the economic (and other barriers) that may limit sales. To me that means it's wise for Apple to build out their partners in India's culture now knowing it won't be the largest driver next year but could be many years from now after China becomes saturated, India's middle class continues to grow, and/or changes to the community/aws allow Apple to get to end users at a lower cost than current allowed.
It seems like India is just too third world for Apple.
Not quite sure what you mean by that, unless you're taking one of your bigoted swipes. Care to tell us?
I don't mean cliches such as "average incomes are low" and "there's malnutrition." Does India have a lot of poor people? Yes. Does it, however, have a lot of -- at least two or three hundred million -- reasonably well-off people? Yes.
I recall the exact same argument made by many here on AI about China having no potential for Apple. Just go back and check ... according to many it was a country of people in rice fields. Western-centric
thinkingignorance doesn't serve us well. Luckily Apple management are smart folks.By the way, I doubt numbers of billionaires as such is a useful metric regarding buying potential for an iPhone or iPad. The new Mac Pro maybe ...
Not quite sure what you mean by that, unless you're taking one of your bigoted swipes. Care to tell us?
I'm just going by what was written in that post above, by blazar.
I'd say you are correct plus I'd point out that when dealing with populations the size in question, it doesn't take a very large percentage of middle-class from such a population to be an enormous number.
Why does a lower number of millionaires or billionaires mean a country has less opportunity? In a divergent income system, the higher numbers of rich people would mean higher numbers of very poor people. The important group is the middle class. The middle class in India isn't as large as other areas and that's the indicator of opportunity (upwards mobility):
http://timesofindia.indiatimes.com/world/china/Chinas-middle-class-10-times-larger-than-that-in-India/articleshow/44816063.cms
http://www.dailymail.co.uk/indiahome/indianews/article-2327182/The-myth-great-Indian-Middle-class-Roughly-30-Indias-population-lives-poverty-line.html
The middle class is noted as having just over 30m middle class households (160m people out of 1.25b). Say that those households get two mobile phones and Apple can target 30% of them, that's 18m smartphone sales compared to their current yearly sales of 150m iPhones. They won't necessarily be the higher-end models but it's worth a try.
I read his millionaire/billionaires comment as a reflection of the number of people that could and would buy CE that is considered CE, not saying that only individuals in those categories would be able to afford it. I also read his comment to refer to a general breakdown of a divergent income system, perhaps compared to China which seems to be ahead of India by about a decade in growing their middle-class.
I also assume his terms were based on USD and not INR (Indian Rupee).
The problem with using terms like lower, middle, and upperclass is they are non-specific and relative. Being middle-class in India may not give you a high enough income to afford the 128GB iPhone 6 Plus sold in India, but in the US I think you'd be hard pressed to find someone defined as middle-class that couldn't easily fold the cost of that device into their budget.
1. India's middle class, at around 400M, is larger than the entire population of the US. That's a lot of a disposable income, which goes a long way in India because costs of living are lower than in Europe or the US.
2. Contrary to the stereotypes some of you may have about India, conspicuous spending is a big deal in modern India. If you go to the mall in Gurgaon (a posh suburb of Delhi), you can pick up a ginormous 4k TV for $25,000 US as an impulse buy. It isn't an outrageously inaccurate generalization to say that India's middle and upper classes love to show off their new hi-end stuff.
3. The iPhone is a massive status symbol in India (as are, to be fair, the largest Samsung phones, which overtook the iPhone in popularity while Apple was stuck with smaller screens for a few years).
4. For as long as I've been working in India (on and off since the '90s), Apple has failed to make a serious play in this very ripe and spendy market. (Even Nokia/MS has a more visible marketing push in India than Apple). I for one am happy to see Apple moving to step up their game at long last.
The difference here is that the numbers support the theory. More wealthy in China.
As previous stated, middle-class means nothing when comparing a specific product. Besides huge variances in cost of living for basic needs, the iPhone seems to cost about 2x as much as in the US, which will limit it's penetration.
Gurgaon Style?
[VIDEO]
That's why the "rich" are more readily to adopt it.
There are/were plenty of Sony and Nokia branded stores in India, but the only time I saw Apple products being sold were in malls where some area was dedicated to Macs that usually weren't the latest. Apple needs more partners, if it can't build a store.
The problem is your comments make it sound like Apple shouldn't even both with all the potential customers in India today and tomorrow simply because China is more wealthy? There is no either/or situation here.
Precisely. Apple has margins it must maintain. They won't dump hardware, unlike Andoid phone manufacturers. When the middle and upper income groups barely qualify as lower income in the US, that is a major limitation for Apple expansion in India. Even if they captured ALL of the highest income households, it would be a very small number. India has limited opportunities for their people and that isn't going to get better under their new leadership.
The numbers look very bad also. They are facing moderate growth for their nation, however inflation wipes that out and their working population is relatively small compared to the overall population. They also rank VERY low in the "ease of doing business" category:
http://en.m.wikipedia.org/wiki/Economy_of_India
I think India's 'potential' has been huge for a few decades now. Nothing sustained ever seems to happen.
I am in agreement with SpamSandwich on this one. India is still a few years away for Apple. It's fine to take a limited position, but it's not time for a huge investment yet. Moreover, it'll be nice to have something big a few years down the road as China starts to mature as a smartphone market.
Let the low end folks like Samsung take it now.
"India is still a few years away for Apple"
All the more reason for Apple to start now and lay the foundation for success when the time comes. Waiting for the last minute is suicide.