PDF: 2962 pages, 5.2 MB - Bay Area Council Economic Institute

Global Reach
In 1997, two of Apple’s main Indian resellers, Wipro Infotech and Tangerine, severed ties with
the firm as it hit a low point in sales and market share. Apple ended its relationship with a third,
Odin Computers. It turned to three others—Godrej Pacific, Summit Data and Ingram Micro
unit Electronic Resources India Ltd.—to reposition sales of the new iMac and desktop publishing
product lines. The iMac’s catchy design, affordable price, and Internet capability boosted
sales in both the consumer and school markets.
The iPod and iTunes were introduced in India in 2004. The media processor chip for
the Mini model was designed in India by the R&D captive of a San Jose company,
PortalPlayer. Later models have used Samsung chips. Apple teamed in 2004 with
Padmalaya-Zica, the animation training division of Padmalaya Telefilms, to launch Apple training
centers in Hyderabad, Mumbai, and Kolkata. The centers provide Apple certification in video
special effects and editing on software such as Shake, Final Cut Pro, DVD Pro, and Maya.
While iPod ownership carries considerable status in India, Daily News & Analysis estimated in
2006 that 60–90% of India iPod sales were “gray market” goods—genuine Apple iPods smuggled
from Singapore, Dubai, or Malaysia and sold on the street, not through authorized dealers.
High taxes and duties (accounting for up to 40% of an iPod’s retail cost), the gray market, rising
BPO salaries and high attrition rates, and a dominant Windows PC market, reportedly led Apple
in May 2006 to cancel plans for a captive customer support facility called Apple Services India
that it had announced a month earlier. It maintained an outsourced call center with Indian BPO
Transworks, however, and entered into a non-exclusive distributor relationship with HCL
Infosystems to provide sales and support for desktop computers and iPods.
In June 2007, Apple resumed ties to Wipro Infotech, in a broader sales, distribution, and support
deal covering all of Apple’s products, including laptop computers and enterprise solutions.
Wipro has created a special team to focus on the enterprise and small business markets. And in
October 2007, Apple raised the stakes in India, announcing a partnership with Reliance Retail to
open 10 stand-alone “iStore” retail outlets, with the first in Bangalore. By May 2008, Reliance
had opened 4 stores and announced plans for a total of 60 by 2011.
Apple rolled out the iPhone in India in August 2008. Response was light, in part because Apple
left the marketing to service providers Bharti Airtel and Vodaphone, and in part because of the
$720-$840 price plus deposit. Unlike in the U.S., Apple is unable to offer a cheaper price subsidized
by phone contracts, due to Airtel’s and Vodaphone’s low average revenues per user (in the
$7–8 range) and customer resistance to either locked phones or contracts. Furthermore, India
does not yet have the network infrastructure to support the 3G iPhone. For this reason, Apple’s
short-term strategy has been to offer the iPhone as a status item to a relatively narrow market of
more affluent Indians.
Online search engine and web portal Google began operations in India in 2004 with
direct (online) sales for the India market. The company saw multiple opportunities: a
large market that was growing exponentially, a chance to be closer to their customers,
and an opportunity to access large pools of talent. The Mountain View company opened its first
non-sales R&D center outside the U.S. in Bangalore the same year. It initially hired some 100
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