Practice English Speaking&Listening with: Why Apple Fails in India (& Why it Matters)

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India is home to 1.3 billion people.

In just five years, itll pass China and become the most populous country on the planet.

And, it shows.

The streets are chaotic, markets, overcrowded, and its economy, bursting with potential.

While its still decades behind on basic infrastructure like schools and sanitation,

Indias GDP is among the fastest growing in the world.

Which, for companies, means 1.3 billion potential customers, Many of whom are using the internet

for the first time ever.

Where Amazon, Google, and Uber struggle to enter and compete with locals like Baidu and

Alibaba in China, theyve largely succeeded in India.

With one big exception: Apple is almost nowhere to be found.

The iPhone is an unstoppable, money-making machine, more successful than Boeings 737,

Toyotas Corolla, and the entire Star Wars franchise.

And yet, here, it only commands about 1% of the whole smartphone market.

Just in the last year, its government threatened to ban the iPhone over a disagreement about

privacy, Apple reportedly lost three key Indian executives, and it failed to get approval

for an official retail store.

Its safe to say things arent going so well.

So, what makes India so different?

And what does it mean for the future of Apple?

This is the sales miracle known as the iPhone.

Apple went from selling 1 million in 2007, to 11 in 2008, All the way to a record-breaking

231 million in 2015.

Turns out people like bigger phones.

The trend couldnt be more clear.

But then, something changed.

In the last three years, sales have beenflat.

And, if we look at all smartphones, you can see Apple is no exception.

What was 40, or 50, or even 60 percent growth, has now become zero.

Now, ifflatmeans consistently selling 200 million premium devices year after year,

well, that doesnt sound so bad.

The iPhone isnt declining, its justnot growing.

But Apple, of course, is a public company, and the stock market is based on the expectation

of growth.

Its not enough to make an unbelievable amount of money.

It needs to make an unbelievable amount more than last year.

Which brings us, back to the basics:

There are three ways Apple can sell an iPhone.

Someone buying their first smartphone, Someone switching from a competitor, or someone upgrading

their current iPhone.

The first two have been incredibly fruitful, and are still responsible for millions of


But there are only so many humans on Earth, And, at least for now, Apple is not in the

business of making more.

Which brings us to the third category: the customers it already has.

For the average person, two-year upgrades are becoming three or four, or whenever this

phone dies upgrades.

Premium smartphone companies are in the business of making better, longer-lasting devices that

will entice more people to upgrade.

But that also makes them less eager to upgrade in the future.

Its a tough game to play.

Weve reached a point where most people are mostly happy with what they have.

In some ways, Apple is too successful for its own good.

Today, it may sell the same number of phones, but more profit is being made, thanks to the

higher prices of the X and XS.

Plus, existing users are valuable in more ways than one - we buy Apple music, iCloud

storage, Apple Watch, AirPods, and soon, Apple streaming video.

So, this graph, the company argues, can only say so much.

Thats why it no longer publishes the number of phones sold.

Sure, sales may be flat, but the average selling price is anything but.

The last two years have proven people are willing to pay eleven, twelve, fourteen hundred


In other words, this strategy is working.

But it cant go up forever.

Somewhere theres a limit.

And thats why emerging markets are, if not existential, at least very important for

the future of the company.

So, Apple, in need of customers, meet, India, in need of phones.

63 thousand Indians are pulled out of extreme poverty every day.

And companies can hardly wait.

Now, in terms of raw GDP, India ranks an impressive sixth place, right behind the United Kingdom.

But, adjusted per capita, its only $1,939 to Chinas $8,827.

Meanwhile, the cheaper iPhone XR starts at $749.

And thats if youre a lucky American.

In India, the price is 77 thousand Rupees, Or around eleven hundred dollars.

And again, thats the cheaper model.

The XS, on the other hand, is upwards of $1,420.

Here, Apples strategy of raising prices is backfiring.

An estimated 75% of smartphones are sold for less than $250.

And 95%, less than 500.

For most people, the iPhone is simply too expensive.

Even the much older iPhone 6 and SE, are sold at relatively high prices.

For that kind of money, customers expect a brand new phone, not a 3 or 5 year old one.

Most Indians dont even buy smart phones, but basic, feature phones like the JioPhone,

which is effectively free with a small, refundable deposit.

So, the iPhone is a tiny sliver of the premium market, which is only a small segment of smartphone

sales, which, account for less than half of all phone sales.

Theres just not that much pie left.

Now, Apple has never purely been driven by unit sales or market share.

For the most part, its just not interested in selling to all price points.

But this market share is barely even noticeable.

Unfortunately, price is only one part of the problem.

It also lacks brand recognition, Is affected by a weaker currency, plus tariffs, And even

for those that can afford it, the iPhone in India just isnt as good a product

It lacks Apple Pay, Apple Maps is, lets say limited, and Siri still has trouble understanding

local accents.

Some of Apples most undervalued assets are its over 500 retail stores across 19 countries.

It builds giant glass cubes, renovates historic theaters, and practically defies the laws

of physics.

Not because its cool, well, not just because its cool, but because they make insane

amounts of money.

No other company makes more money per square foot of retail space.

And if you have any doubt about that, I dare you to walk through one without bumping into


But, all this means nothing in India.

Here, phones are sold in small, local shops where brands have little to no control.

Not the best conditions for a company which regulates the height of its tables.

And, at least for now, it legally cant open a store.

The Indian government requires that any foreign-owned company buy at least 30% of its materials

within the country before opening a retail store.

In response, Apple has started manufacturing the SE and 6S in India, which it may soon

do for newer phones as well.

In the meantime, Chinese brands like OnePlus, Oppo, and Vivo, carefully target the Indian

market by producing low-cost, locally-manufactured devices.

Ultimately, the reason Apple cant compete is simple: its not willing to adapt.

The company has all the resources in the world, but unless it makes a significant change in

strategy, India will never be the next China.

The iPhone accounts for over 60% of Apples total revenue, to continue growth, it has

no choice but to do what Apple does best - destroy its own, thriving product with an entirely

new category.

Since reaching a one trillion dollar market cap, Apple stock has been unusually shaky.

Sometimes this is significant, sometimes its normal, market fluctuations.

And you can tell the difference by understanding ideas like statistical variance, which you

can learn with Brilliant.

You dont wanna panic and sell here, which is why this knowledge pays off.

Thats the power of topics like math, logic, and machine learning combined with economics.

You can see a business from a whole new perspective.

If you like learning new things, and, clearly you do, youll love the way Brilliant helps

you understand new ideas, not just memorize their formulas.

To get started, go to and sign up today for free.

The first 200 people to use that link will also get 20% off the annual Premium subscription.

Thanks to Brilliant for sponsoring this video, and to you for listening.

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