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  1. Disappointment for Apple in India; can’t sell refurbished iPhones

Disappointment for Apple in India; can’t sell refurbished iPhones

India has rejected a plan by Apple Inc to import used iPhones, government officials said, a blow to the US tech giant which has been seeking to revive flagging sales of its flagship smartphones.

By: | New Delhi | Updated: May 4, 2016 3:53 PM
apple iphone Apple sells what it calls refurbished iPhones at a discount in some countries including the United States, and extending this practice to India would have likely helped it gain market shares.

Even as the Tim Cook-led technology giant bets big on India, Apple’s plan to import used iPhones has been rejected, government officials have said. This is a blow to Apple which has been seeking to revive flagging sales of its flagship smartphone, the iPhones.

Apple sells what it calls refurbished iPhones at a discount in some countries including the United States, and extending this practice to India would have likely helped it gain market share against competitors with much cheaper offerings.

The move comes even as Tim Cook has acknowledged the importance of Indian market to Apple’s long-term growth plans. Apple sees a “huge market potential” for its products in India and the technology giant is “really putting energy” in the country which will begin rolling out high-speed wireless networks this year, Cook said recently.

“India will be the most populous country in the world in 2022. India today has about 50 per cent of their population at 25 years of age or younger. It’s a very young country. People really want smartphones there,” Cook said in a CNBC interview.

He said in emerging markets like India, LTE (wireless) penetration is currently “zero” but as LTE begins to roll out this year in the country, the dynamics will change. “And so that’s changing. Huge market potential,” he said in response to a question about the Indian market for Apple.

Meanwhile, the iPhone and iPad maker may get exemption from a mandatory local sourcing rule in India for foreign direct investment (FDI), which will enable the company to open single-brand retail stores in the country.

A government committee has recommended that the tech giant’s technology is fit to be called “cutting-edge technology”, which means it can be exempted from the rule on mandatory local sourcing (at 30%), sources told FE.

In an editorial last week, Financial Express called this likely move a step in the right direction. “Given that this will bring in both world-class technology/practices to India, apart from creating jobs, this can only be a good thing, both for Indian consumers as well as foreigners who want to invest in the country,” said the editorial. (Read the full editorial)

Tim Cook feels that while India presents a “really great opportunity” for Apple, slow networks and the informal retail structure are preventing the tech giant from realising its full potential.

Cook said while India is the third-largest smartphone market in the world, it is dominated by “low-end” smartphones primarily because of the network and the economics due to which “the market potential has not been as great there.”

He said faster networks will “unleash the power and capability” of the iPhone in a manner that older networks like the 2.5G or even some 3G networks, would not do.

“And so the infrastructure is one key,” he said.

At a time when Apple has posted its first-ever decline in iPhone sales, the growing importance of the Indian market cannot be overstated. Apple also reported its first revenue drop in 13 years as the company credited with inventing the smartphone struggles with an increasingly saturated market. The company’s sales dropped by more than a quarter in China, its most important market after the United States, and it also forecast another disappointing quarter for global revenues.

After years of blockbuster sales, many investors fear the iPhone has reached saturation, spelling the end for Apple’s exponential growth.

 

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