Apple iPad in India: Was there a way out?

SECTION-B GROUP-4

Introduction

• Apple : Product Offerings• MP3 Players• Phones• Laptops• Tablets• Cloud Services• Entertainment

• iPad• Various Generations: Latest version iPad Air 2• Runs on iOS Operation System: Latest version iOS 8.4• The main idea was to reduce the dependency on laptops• 1st Generation released in 3rd April 2010(US)• In India it was released on Jan 2011• Worldwide production of 1st generation stopped in March

2011 with the launch of iPad 2nd generation

iPad vs Others Tablets in India

Potter’s Value Chain

Potter’s Value Chain

Issues relevant to business processes

Strategies adopted by apple:

• Limited No of variants were provided to ensure consumers mind were not plagued which may led to indecisiveness.

• Focused on the usage through its applications in various industries. E.g. NASA app, University of Cambridge app.

• Worldwide, Apple ensured users could buy an iPad not only from its own Retail outlets, but also gave the consumers many options to buy from. This put an end to the grey market that was importing iPads through illegal channels, and selling them at extremely high prices with no warranty.

Issues relevant to business processes

• No retail presence in India made Apple lose one of the key components of its Value chain: Customer Service.

• Prices of other available tablets were low. The transportation of goods from warehouses in the U.S. to India could have been reduced If they had set-up a warehouse in India. This could have further reduced the price Of iPad.

• Apple could not get the first mover advantage in India. It delayed the launch of iPad in India by nine months from its launch in the US.

Issues relevant to business processes

Managerial Issues:

• Promotional videos were predominately featured children, college students where actually 50% users were professionals.

• Why India became a Laggard? The excess demand in the market is cited as the main factor behind the delayed launch elsewhere in the world.

Why so? Think!

• Indian consumers are termed as Laggards in the Production Adoption Lifecycle for Apple. Why?

• Apple had limited distribution channels in India. Why?

Why so? Think!

Apple delayed the product launching in India. Was the decision deliberate?

Were the Decisions right?

All these questions ultimately questions the decision making methodologies adopted by the Apple.

Were the decisions taken by the Strategic management Team of Apple correct??

Single Brand FDI restriction in 2011

• FDI norms in single brand retail were not conducive

to companies dealing with consumer goods

• Apple prefers to have its own supply chain. Was not

possible because of government restriction.

• FDI limit in Single Brand Retail – 51%

• Who will not want a 49% share of Apple India.

The multi-layered distribution model (In India)

At all these various stages, the intermediaries are paid commissions which add to the costs of the final products.

Firms try to minimize the number of intermediaries to save costs and enhance efficiency.

Difficult for a new venture to get its products to a large audience.

INDIA

Its easy for companies to bypass delivery problems by working directly with large consumer-facing hubs such as Wal-Mart, Amazon etc

US

How does Apple drive profit and volume in other areas?

•Sell product at less price, but has a two year contract , with locked to AT&T network

•For two years, Apple earns on every MB you use, every minute you call and every SMS you send.

•India lacks the 3G network coverage• Many Network Operators leads to tariff wars•No Subsidized devices to the Indian Consumers•No revenue sharing with Telecom Operators•No bulk sales and less profits

Contract Model

•Who in India actually buy apps! •Prevalent Piracy•Low digital content sales•Everyone will just get them jail-broken.•Very less Content Revenue for Apple.

Selling apps , games and

songs

Conclusion-The decision was Right!

No Bulk volume sales No control/apple stores

No revenue sharing with telecom operators Less content revenue

Equation for Apple in

India(2010-11)

Tim Cook– WWDC(2012)

I love India …… but I believe Apple has some higher potential in the intermediate term in some other countries.

This doesn’t mean we’re not putting emphasis in India. We have a business there and it’s growing but my own perspective is that in the intermediate term there will be larger opportunities outside (the country).