NEW DELHI: NEW DELHI: Apple has started manufacturing the iPhone 7 model in India, in addition to iPhone SE and iPhone 6s, thus widening its 'Made in India' portfolio and signalling its intention of developing the country as a manufacturing hub.
“We are proud to be producing iPhone 7 in Bengaluru for our local customers, furthering our long-term commitment in India,” said Apple in an e-mail to ET exclusively.
Taiwanese contract manufacturer Wistron, which makes iPhone SE and 6s models out of its plant on the outskirts of Bengaluru, has been making the iPhone 7 devices in India since the beginning of March.
People familiar with the matter said that a price drop for the iPhone 7 is unlikely with analysts saying the company will invest the margins made from these devices into a more aggressive sales and marketing play.
“iPhone 7 is a low risk kind of product for Apple to make out of India. To that extent, it (local manufacturing of iPhone 7) is about revalidating Apple’s India manufacturing capability before they scale up to other models,” said Navkender Singh, research director at IDC India.
He added that Apple will make more money at the same price points, owing to higher margins now.
“They will use the funds in their channels, for market development purposes most likely,” he said, ruling ruling out price cuts. “Apple is price conscious.”
Apple is coming off its weakest year – 2018 – since 2014 and has revamped its management team and sales strategy, with analysts saying it’s clear that the company is planning to treat India more as a manufacturing and export hub – also in the backdrop of the China-US geopolitical pressures - rather than a destination for its products’ sale. The high prices of Apple’s devices and competition from Chinese players offering advanced feature at far lower prices meant Apple’s market share in India sunk to around 1.2% in 2018, from 2.4% in 2017.
Singh said that locally manufacturing the iPhone 7 won’t drive up Apple’s volume sales in India in 2019 – which are again expected to be “sluggish” - but it is more about testing waters in the manufacturing segment for high-end Apple phones”.
As per news reports, the company seems to be planning to phase out iPhone 6 and 6s from the Indian market, and this could mean that iPhone 7 now becomes the entry level model for India, he added.
Talking about India as a market for Apple as a whole, Singh said that while the device segment remains hard to crack for Apple, it will be interesting to see the launch of the company’s content services. “We think it will take some time for Apple to launch its video streaming service in India. It could easily be a year before we see Apple’s video content video in India”.
Apple last week launched a television and movie subscription service, a credit card, and a digital video game arcade as it sought to reposition itself as an entertainment and financial services company, which also makes smartphones.
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