Listen to this story
The Indian market has been abuzz with the news of Apple opening its first retail store in India. The opening of the store is the final step in Apple’s Make In India strategy attempt, where the tech giant is aiming to capitalise on India’s burgeoning manufacturing capabilities. However, there might be more to the story.
Worldwide, Apple’s personal computer (PC) sales (laptops, workstations and desktops) have been hit by the recession, dropping by over 40% in the last quarter alone. The company was hit the hardest by the economic downturn when compared to other manufacturers, but India might just be the antidote to its problems.
Capitalising on India
Apple has been trying to leverage India’s capabilities ever since its Chinese supply chain was disrupted due to the COVID-19 pandemic. In addition to factory shutdowns all across China, the country’s zero-COVID policy resulted in a manufacturing crunch that Apple was eager to address, adopting a China+1 policy for manufacturing.
Subscribe to our Newsletter
Join our editors every weekday evening as they steer you through the most significant news of the day, introduce you to fresh perspectives, and provide unexpected moments of joy
Since then, Apple has set up a factory in India in Hosur, and took over Foxconn’s Sriperumbudur facility for assembly of iPhones. These factories are targeted to take over 25% of Apple’s manufacturing workload from Chinese factories.
The Indian government has also played an active role in encouraging Apple’s Indian dreams. Under the smartphone production-linked incentive, Apple was able to export over $1 billion worth of iPhones in a month and created over 1 lakh jobs in just under 19 months.
However, the company has declined to manufacture its more expensive iPads and MacBooks in the country, mainly because it does not have a non-Chinese contract manufacturer for these products. Due to the Indian government’s hardline stance against Chinese investments in Indian factories, Apple has found it difficult to navigate the regulatory landscape to allow for iPad and MacBook manufacturing.
The Indian government, however, has kept the door open for Apple, with government sources stating that Apple can join the manufacturing PLI at a later date, up to two years down the line.
Even as it fails to materialise a manufacturing plan for its most profitable devices in India, it seems that Apple is looking to lock in the Indian market to revitalise its falling sales. A report by IDC found that Apple’s PC sales have dropped by 40.5% in the last quarter. After record sales during the COVID-19 pandemic, more specifically 111.5% in 2021 Q1, it seems that the demand has finally fallen off for Apple as spending slows down.
Experts have predicted that the next big boom for PC sales will come in 2024, due to an ageing installed base looking for an upgrade. Until then, companies might need to find a stopgap measure, and it looks like Apple is looking towards India to fill the gap.
A small slice of a big pie
The Indian PC market has slowly been growing over the past few years, spurred by a huge spike in PC sales over the course of the pandemic. In fact, the sector only recorded a loss of 11.7% in Q3 2022 after a whopping eight quarters of consecutive growth, even though the shipments numbered close to 3.9 million units. Despite this evident decline, the Indian PC market has surged as worldwide markets experience a shortfall, growing by a marginal 0.3% year-over-year.
Even in the midst of a global pandemic and economic downturn, the spending power of the Indian population has continued to increase. Customer spending for 2021 recorded a 16.7% increase over 2020, representing a 10% net increase over 2019. As Apple’s PC sales continue to decrease, it seems that the company wants to capture a slice of the Indian pie by starting its retail operations in the country.
Apple has already taken over the luxury smartphone market in India, boasting over 50% market share in this segment. In February, it was reported that Apple reported three consecutive quarters of double digit growth, mainly on the back of iPhone sales. Now, it seems that the company wishes to replicate this market dominance in the PC market as well, with the next leg of its strategy—retail stores.
The Cupertino giant is looking to open two retail locations in the country—one in Mumbai and another in Delhi. This two-pronged strategy will not only allow them to capitalise on the increasing spending power of the Indian middle class, but also target the upper-class and elite population, which are one of its core markets.
The opening of the store also comes alongside a new set of products across all lineups. Leaks have surfaced that Apple is working on a new 15.5-inch version of the MacBook Air, a new Mac Pro with M2 Ultra, and a purported iMac based on the M2 chip. When compounded with the company’s expansion strategy in India, these new products might just be the catalyst Apple needs to get back on its feet.