Apple's first store in India: A promising frontier for the tech giant

Tim Cook, the chief executive of Apple, visited India this week to open the company's first two Apple stores there: The biggest public company in the world is finally opening its first retail outlets in the world's most populous country.

Roaring crowds of would-be customers greeted him in Mumbai on Tuesday at a sleek glass-and-timber flatiron of a storefront, called Apple BKC, in the Bandra Kurla Complex. On Thursday, Cook will travel to New Delhi to open a second store, Apple Saket, at the center of the capital's biggest mall.

The Apple brand is not new to India. But for the past 25 years - marked this week, in fact - Apple has relied solely on third-party sellers to get its phones into the hands of Indian consumers. The iPhone is still a rare sight within the ocean of cheaper, and mostly Chinese-branded, Android smartphones that have swept across India over the past decade. Yet in India, as in nearly every other part of the world, Apple has its fans. Some of the most ardent were at the Mumbai opening, screaming their support.

And in Delhi are eager customers like Amar Bhasin, 41, whose first cellphone, bought 18 years ago, was a Panasonic. More recently, he bought an iPad from an Indian outlet, only to discover that its screen was cracked. The store refused to exchange it, and local service centers weren't helpful. So Bhasin addressed a letter to Cook himself - and a month later, a new iPad appeared in the mail.

"I felt so good, and became an Apple fan instantly - who does that?" Bhasin said, standing before the still-shrouded Apple Saket. "I don't see myself buying another brand in the foreseeable future."

India is an important frontier for Apple. It was by far the biggest country to lack an outlet bearing its own brand. Some much smaller countries have multiple Apple stores: Switzerland has four, and even Macao, a Chinese territory with a population of 680,000 people, or 0.5% of India's, has two.

But those countries are something India is not: rich. Even the lower to middle income countries with Apple stores, such as Brazil, Thailand and Turkey, have per capita incomes several times higher than India's.

In a potential market so big, Apple does not need to make much of a dent to earn back its investment. The company's market share in India has been growing rapidly. The iPhone 13 is the best-selling model in the premium segment, which includes phones that cost above 30,000 rupees, or $365. Last year, only 11% of the market was considered premium, but it was the fastest-growing segment. The Chinese smartphone maker Xiaomi sold the most phones in total, and the South Korean giant Samsung, which competes at different price points, had the highest value of sales, according to Counterpoint Research.

But Apple faces a consumer-pricing puzzle in India. Unlike a McDonald's, for example, Apple's signature products need to sell for roughly the same price everywhere (or else they would fly around the world, unlocked, on the black market). But the difference between marketing utility goods and luxury products becomes jumbled in the Indian context. In the Saket mall, called Select CityWalk, a bubble of air-conditioning and chromed shopfronts are across the road from a chaotic medieval warren, the Apple store is opposite a Krispy Kreme. Outposts of Chanel and Van Heusen are nearby.

Price hits differently in a country where the top 10% income bracket begins at 25,000 rupees, or $304, per month - well under half the cost of a new iPhone. For many millions of wealthy Indians, that is perfectly acceptable. And even for those whom it stretches, it can be a price worth paying.

"It's simple: For me, it's a status symbol," said Subodh Sharma, who earns exactly 25,000 rupees per month working for a construction company. "The message that goes out to the peer and society is that look, this person is not totally third-class," he said, glancing down at the iPhone tucked into his shirt pocket.

Sharma's partner, Bhawana, however, disagreed with his assessment. An iPhone is "not worth it," she said, right after Sharma took her photo in front of the store in Delhi. "It's uselessly costly and its storage is small and battery life even worse." She prefers the Chinese-made Oppo phone she has been using for the past four years. (She earns 18,000 rupees per month at her job.)

Apple's formidable ecosystem is bound to spread more slowly in a place where the iPhone remains out of reach for so many. Kunal Dua, who runs a pharmaceutical business, recently converted his wife, Gagan Deep Kaur, to the iPhone - but only halfway. She uses it for her Instagram account and other parts of her online social life, but she stays on her Android for work. "Most people working under us come from lower-income groups and cannot afford an iPhone," Dua said. "So sharing media and files becomes difficult."

The relationship between Apple and India is evolving quickly. The part that matters most may have less to do with India's consumers than with the country's growing role as a production hub. Last week, analysts at JPMorgan Chase published a report describing how a push to relocate manufacturing and supply chains away from China has been underway "since late 2018, led by geopolitical issues, then a pandemic and now geopolitical issues again rearing their ugly head." They expected a sustained shift and estimated that about a quarter of Apple's products will be made outside China by 2025, versus less than 5% today, "with Vietnam and India slated as countries of choice."

That migration of high-end manufacturing might activate another ecosystem altogether. Apple is not just any multinational company. A report from Mirae Asset Financial Group said that "given Apple's size, it is a key player that can set standards and influence policy decisions," noting that the company has catalyzed China's growth. "We see a similar trend now occurring in India, as Apple diversifies its supply chain into India and a burgeoning local tech-manufacturing ecosystem develops."

Ultimately, new factories and entire new industries will need to be built before India can generate the kind of wealth necessary for more of its 1.4 billion potential consumers to become regular Apple customers. During the store opening on Tuesday, Cook pressed his palms together in a gesture of namaste. Later that day on Twitter, he praised Mumbai for the city's "incredible energy, creativity, and passion." His fans in India were already delighted to see more of his company in their country. They may now hope that even more multinational executives follow his lead.

This article originally appeared in The New York Times.