Apple Plants Seeds of Growth in China, India
Tim Cook's company may have received a presidential shout-out last week thanks to plans to boost its U.S. manufacturing, but Apple still has big plans for making and selling hardware in two of the world's fastest-growing markets, China and India. People in those countries are buying more smartphones, and Apple is pursuing plans to make sure that many of them are iPhones.
02/20/13 5:00 AM PT
President Obama gave Apple some special attention last week when he mentioned the tech giant in his State of the Union address, praising it for bringing more of its manufacturing stateside.
After the president's statements, cameras focused on Apple CEO Tim Cook, who was a guest of the First Lady. President Obama, meanwhile, seemed to be focusing on an Apple announcement from late last year that said the company planned on making one of its Mac lines in the U.S. rather than outsourcing the job overseas.
The move was praised for its potential for creating American jobs, and possibly encouraging other tech companies to make similar moves. Make no mistake, however: Apple sees a world of growth in other global markets, not just in a smartphone-saturated U.S.
As much praise as the U.S. manufacturing initiative has brought the company, some consumer advocacy groups still want proof of a bigger change from Apple. Even the very public words from the president still aren't a guarantee that Apple plans on following through with its promise, said Kaytee Riek, campaign manager for SumOfUs.
"President Obama didn't announce that Apple was moving its one million-person factory to Kansas City," Riek told MacNewsWorld. "He said Apple will start making some products in the U.S. The vast majority of workers in Apple's supply chain won't see anything change from this announcement."
Apple did not respond to our request to comment for this story.
Even if Apple moves some of its supply chain out of China, the company's hardware is becoming more prevalent among consumers there, according to new reports from Flurry Analytics. The research shows that China is surpassing the U.S. to become the world's largest market for iOS and Android devices.
The two countries showed equally active smart device installment bases in January 2013, with 222 million in the U.S. and 221 million in China, Flurry reported. It projected that by the end of February, though, China will be on top, with 246 million devices ahead of the 230 million expected to be active in the U.S.
Apple understands the potential of China's widely untapped market. The company has been vocal about expanding its effort in emerging markets, particularly in China, and Cook has made a few trips to the country.
That's a smart move by Apple, said Michael Stanat, global research executive at SIS International Research. It's a boost not just for its iPhones but for all of its hardware products.
"China is expected to, or by some accounts already has overtaken the U.S. in the number of Android and iOS devices, and in laptop sales in 2011," he told MacNewsWorld. "The Chinese market is not just thirsty for mobile phone devices but also computers. Having an Apple product is a prestigious status symbol in China and for some it is conspicuous consumption. The Chinese government is currently undertaking infrastructure projects in which they have been buying new electronics."
Apple, however, can't rest easy with the belief that Chinese consumers are all clamoring for its products, added Stanat. The company still doesn't have a deal with China's largest carrier, China Mobile, and it also needs to understand how to market a product that will directly appeal to a mainstream Chinese consumer.
"The Chinese are eager for all sorts of Apple hardware, not just the iPhone," he pointed out. "The Chinese may not be so eager for all of the apps that come with its phones. The Chinese are not as eager to pay for intellectual property as they are for hardware."
Don't Forget About India
Thanks to population rates worldwide, India is the only country that has a chance of slipping ahead of China in the active device rankings. With only 19 million smart devices currently activated in India, though, Flurry said that wouldn't happen anytime soon.
That development marks another opportunity for Apple, said Stanat. The company hasn't focused its efforts on India like it did in China, but the Indian Economic Times reported this week that Apple's smartphone marketshare there has soared by more than 300 percent in the most recent quarter, making it the second largest smartphone competitor in the country.
If Apple can continue to capitalize on that market like it has in China, the payoff could be huge for the company, he noted, although that might take place over a longer growth period.
"There may be reason to believe that India may follow some of the same patterns as China in terms of smart mobile devices and iPhone apps," Stanat said. "The Indian market has the potential to display a bigger thirst for mobile devices as it is a rural country in which many areas do not have Internet lines installed."