By Newley Purnell and Rajesh Roy
NEW DELHI-- Apple Inc. Chief Executive Tim Cook met with Indian
Prime Minister Narendra Modi in New Delhi Saturday, the most
high-profile engagement yet on Mr. Cook's dayslong charm offensive
in a crucial but challenging market for the company's growth.
Mr. Cook shared Apple's plans in India with Mr. Modi and the
pair spoke about manufacturing and retailing in the country, a
government statement said. Mr. Modi in turn explained his Digital
India initiative and sought support from the company in furthering
the objectives of the program, which aims to connect hundreds of
millions of villagers to the Internet.
An Apple spokeswoman didn't immediately respond to a request for
details on what was discussed.
"Thank you @tim_cook!" said a message posted on Mr. Modi's
verified Twitter account after the meeting, showing the two men
standing together, looking at Mr. Modi's iPhone. "Your views &
efforts are always enriching."
Mr. Cook in turn thanked Mr. Modi from his own official Twitter
account and added that he is "Already looking forward to next visit
to India."
Analysts said Mr. Cook is likely to advocate for Apple's
existing proposal to refurbish and sell secondhand iPhones in the
country, which would be key given 70% of smartphones sold last year
in India cost less than $150.
In addition, Apple in January said it had sought government
permission to open its own retail stores and sell products online
to supplement Indian-owned distribution firms and retailers.
Mr. Cook's visit to India this week has seen him pose for photos
with Bollywood stars, visit a Hindu temple and watch a cricket
match. Apple announced plans to open two new offices in India to
foster the development of mobile apps and mapping services in the
country.
But while the trip may have helped raised awareness of Apple's
brand in the world's second-most-populous country, the firm still
faces serious obstacles selling its relatively expensive iPhones a
price-sensitive market, analysts say.
Mr. Cook is seeking to ramp up revenues in India as iPhone sales
fall in China, long an engine of the Cupertino, Calif. company's
growth. Apple last month posted its first quarterly decline in
revenue in 13 years.
India is set to become the world's second-largest smartphone
market behind China, but Apple's market share was just 2.7% in the
first quarter of this year, according to research firm Strategy
Analytics. That is mainly due to cost: Most iPhones in the country
sell for more than $500--approximately one third of what the
average Indian consumer makes in a year.
Distribution is also a challenge. Apple struck a deal with China
Mobile in 2013, making the iPhone available in thousands of China
Mobile outlets. But in India, consumers typically buy handsets
separately, often in mom-and-pop shops, and use prepaid carrier
services.
Not long after Mr. Cook touched down in India, Apple on
Wednesday said it is establishing a center in Bangalore, a southern
Indian city home to many tech workers and startups, to encourage
the development of apps for the company's iOS software, which
powers its mobile devices.
The center is expected to open early next year, Apple said.
India is dominated by cheap handsets running on Android, the mobile
operating system from rival Alphabet Inc.'s Google.
On Thursday Apple said it is opening of a new office in
Hyderabad, another technology hub in southern India, to develop
mapping services for its iPhones and other products. The new
facility will "accelerate Maps development and create up to 4,000
jobs" in partnership with a local IT firm, Apple said in a
statement.
Meanwhile, Taiwanese electronics manufacturer Foxconn--the
company officially known as Hon Hai Precision Industry Co., which
makes iPhones--said last year it plans to spend $5 billion on
factories, research and development across India
Amitabh Kant, the top bureaucrat at India's Department of
Industrial Policy and Promotion, has said that Apple having its
devices manufactured in India would be a logical step as it looks
to boost sales in the country, according to local media
reports.
"It's a branding exercise," Rushabh Doshi, an analyst at
research firm Canalys, said of Mr. Cook's visit. "The outcome will
be better awareness for Apple. It's kind of setting the stage to
prove that India is an important market" for the company, he
said.
Mr. Cook's movements this week have been tracked closely by
local media, resulting in a torrent of print and TV coverage, along
with commentary on social media sites.
Wearing a traditional scarf and bearing an orange mark on his
forehead, Mr. Cook on Wednesday met with Anant Ambani, son of
industrialist Mukesh Ambani, outside a Hindu Temple in the
commercial capital of Mumbai.
He was also photographed at a party with two of Bollywood's most
eminent stars, Shah Rukh Khan and Amitabh Bachchan. Mr. Cook even
attended an Indian Premier League cricket match, a move sure to
warm hearts in a nation obsessed with the sport.
The announcements about new offices in India, along with his
public appearances, are likely meant to communicate that Apple is
"investing in the economy and trying to drive growth," said
Kiranjeet Kaur, an analyst at IDC.
"A lot of urban people would know about Apple," Ms. Kaur said,
but fewer in smaller cities are familiar with the company, much
less able to afford its gadgets.
iPhones are "so far out of range for most people that they
wouldn't consider them," she said.
Write to Newley Purnell at newley.purnell @wsj.com and Rajesh
Roy at rajesh.roy@wsj.com
(END) Dow Jones Newswires
May 21, 2016 05:32 ET (09:32 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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