India takes a bite

/ 5 min read

Apple has begun to expand its sales network in the country, and consumers are increasingly giving in to temptation. but is the iconic purveyor of macs and iPods doing too little too slowly?

Nilanjan Das
Credits: Nilanjan Das

SOMETIMES SINGLE PIECE FALLS in place and makes the whole jigsaw a breeze. In Apple Inc.’s quest for the Indian market, that piece could be last year’s decision to move India from the Asia-Pacific to the Europe, Middle East and Africa (EMEA) chain of command. It certainly seems to have helped the California-based custodian of cool to start making its presence felt in India. After all, how long could the world’s second most valuable company (Apple’s market cap is $266 billion or Rs 11.7 lakh crore) ignore the world’s second fastest growing economy?

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Apple ads scrapped the ‘Think different’ mantra long ago, but it’s reflected in the way the company is going about its business here. For instance, Pascal Cagni, EMEAI (the ‘I’ was added for India) region head and Apple veteran of 10 years, reportedly encourages executives visiting from London to soak in the local market experience by taking autorickshaws to work.

Apple refused to speak about its India plans with Fortune India, citing its policy of not discussing individual country strategies. However, resellers—as Apple calls its retail partners—say that when the India office reported to Singapore, the subcontinent usually lost out to other Asian markets for the supply of gadgets. India’s shift to the EMEAI region, they say, has improved availability and streamlined pricing through schemes such as a 12% student discount and the recent Rs 6,000 off for customers who turn in any old laptop and buy a Mac.

Marketing is only part of the story. Apple, which once sold through dealers and had hardly any retail presence, is now seen in malls in the metros and even in smaller cities such as Ludhiana. The number of stores where Macs are sold has grown steadily over the past two years. These are in formats that Apple uses globally: Premium Resellers, which are run by other companies but sell only Apple products; Apple Shops, which are sections of multibrand retail stores designed by Apple; and Apple Solution Experts, who specialise in areas such as creative fields or education. Other types of outlets, such as the Apple-operated New York City flagship and the online store, are yet to open in India.

Perhaps the largest growth is in the Premium Reseller category—there are now 28 in India—followed by Apple Shops (20 outlets). The first of the stark white Premium Reseller stores opened in Mumbai’s Atria mall in 2006. Mohnish Bharadwaj, who handles sales at Imagine, a premium reseller, in Gurgaon near Delhi, says such is Apple’s attention to detail that even the colour of the display tables must meet exacting standards.

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Store design or not, Apple is certainly doing something right. Market intel provider International Data Corporation (IDC) says Apple has upped its market share in terms of the number of units sold from 0.4% to 0.6% between July and September 2010. It may seem tiny—especially compared with market leader Dell’s 16.7% share—but it reflects Apple’s growing push.

Pranab Dutta, business owner of design boutique Great Latitude and one of the earliest Apple users in India (he got his first Mac in 1985, and a decade later featured in an Apple ad campaign) points out: “To know how popular Apple is becoming in India, all you need to do is to wait for a few minutes at an airport security check. No way can you miss the number of people taking out MacBooks and MacBook Pros.”

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Resellers say sales in cities such as Delhi and Mumbai today vary between 70 and 100 Macs (costing Rs 60,000 to Rs 1.1 lakh) per month per store, compared to 20-odd Macs a year ago. These stores stock iPods too, but sales in value terms are skewed at around 70:30 in favour of Macs. That’s no surprise, given the iPod (starting at Rs 3,200) competes with cheap mobile phones that play MP3s.

Ajit Joshi, chief executive of Infiniti Retail, which runs electronics retailer Croma, a chain with more than 50 stores nationwide, says things have changed since 2006, when it walked away from an exclusive Premium Reseller agreement. Back then, Croma was concerned that Apple lacked an India strategy, and that consumers weren’t ready for the company’s products. “Apple is certainly more focussed now,” he says. Croma currently has Apple Shops in many of its multibrand outlets. Joshi expects that 2,000 of the 42,000 computers he sells between October and December will be Macs.

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With 17 exclusive Apple stores, Reliance Digital claims to be the world’s biggest Premium Reseller. “We’re in the middle of drawing up our network plan with Apple. Wherever there’s an opportunity, you’ll see us expanding,” says Kaushal Nevrekar, Reliance Digital’s head of business for iStore.

Retail chains have certainly helped Apple grow. While the ‘Upgrade to Mac’ campaign tests Indian consumers’ openness to new technology, Premium Resellers host free ‘New to Mac’ classes. IDC estimates that the Apple’s value share in dollars for computers has more than doubled (Indian market size: $1.7 billion) from 1.1% between July and September 2009 to 1.7% in the same quarter of 2010.

While it’s clear that there’s consumer momentum, it’s harder to say whether Apple’s eggheads are doing enough to cash in. It may be a while before the company claims a larger slice of the India pie as it’s doing in China, where it runs two 16,000-square-foot stores in Beijing, opened a couple more in Shanghai this year, and reportedly plans to open another 25 in 2011. Gartner, a U.S. firm that tracks IT, estimates that China will account for 60% of 114.6 million PC shipments in 2010 in the Asia-Pacific region.

Marketing guru Jack Trout reaffirms that Apple’s cautious approach in India is par for the course. “A retail operation would take a lot of time. Training people, location—those are big issues with Apple, which is very picky about what it does. It wants to get it right, and that also slows you down,” he explains.

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Slowness is one thing, but disappointing consumers is another. Six months after its U.S. launch, the iPad is yet to come to India because of supply constraints. Then there’s the iPhone: IDC says only 91,000 were shipped to India in 24 months of its 2008 launch. Lastly, there’s iTunes’ persistent refusal to accept payment in rupees.

Apple’s extraordinarily strong sales in its home market even in tough times—43% of its record $20.3 billion revenue in the July-to-September 2010 quarter (up from $12.2 billion last year) came from the U.S.—say something about its consumer appeal. Buyers in India, though, may prefer a deeper engagement as well.

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