Apple is looking at India as an investment destination, in addition to pushing the sales of its products in the country.
In his first ever interaction with an Indian media organisation, Tim Cook, CEO of Apple, said the facilities announced for Bengaluru and Hyderabad were only the beginning of what’s to come.
“We have thought through many areas (of investment) and we will move ahead in all these areas. What we have announced in Hyderabad and Bengaluru are just a couple of initial things, there’s more coming. We are committed to India,” Mr. Cook said in his first interaction with an Indian media organization.
Asked if Apple would consider manufacturing iPhones here, Mr. Cook said, “We are looking at India as a partner across (segments), not just for any one area. Manufacturing is something we will logically look at.”
On the controversy over pre-owned phones, he said he would urge the Centre to come to an agreement. “If you think about automobiles, brands like Lexus and Mercedes have been selling certified pre-owned cars. We have this programme in the U.S. and in most parts of the world. When they are sold, they are sold with warranty, just like a new product. We would never sell a product that we didn’t think was right,” he said.
Mr. Cook said he was not chasing market share in India but wanted to partner with telecom operators to enhance the quality of services. “We are in India for the next thousand years. Our horizon is very long. We are focussed on best, not most. So it doesn’t bother me that we don’t have top market share,” he said.
In the US and other markets, Apple gets a significant part of its sales through partnerships with telecom operators. In India, it has not been able to push through with this model. During his visit, Cook is meeting a number of operators to see if Apple can work with telecom companies to improve network quality. “I see a great technical collaboration between Apple and main carriers in India and to make sure the iPhone works incredible on those networks. The feedback I have thus far is very positive on that. We push really hard, in some ways they think we are crazy, but they love it as well that someone is pushing them hard to work together to solve the most difficult problem.”
When asked if India could be as big as China for Apple some day, the Apple chief said that all the ingredients are in place for India to grow exponentially. “I see a lot of positive things happen in the country and more will happen. From GDP point of view there is no doubt in my mind that India will set new records. I can feel it will happen,” Cook said.
You have been in India for two days now, meeting industrialists, Bollywood stars including Shah Rukh Khan. How were these meetings and what is the learning so far?
It’s been a great learning experience for me. What I wanted to do was to learn about people, about culture, about how business is done, what things are changing and what are the catalysts for the change. In particular, I wanted to understand the telecom networks in the country, especially with 4G coming. I met with network operators and I am very optimistic that 4G is now coming, after a long wait. It can be a huge change agent. I have met some of the industrialists of India and that gave me a great deal of perspective. Apple has long served the creative markets. That’s how we started – by focusing on film-makers and artists. So I spent some time with film-making groups and it’s unbelievable. I am picking up various things but the thing that trumps all of those is the warmth of the people. This is very unique. You quickly feel like you are part of a community and you have made lifelong friends.
Let’s step back a little. There are stories of how Steve Jobs came to India when he was a teen and found it “intense and disturbing” and then never looked back. Could you give us an insight into how Jobs viewed India?
Steve’s conversation about India with me was very different from what you are saying. He, at that point in life, was seeking inspiration and purpose. He came to India for that. I can tell you that it guided him for many, many years thereafter. He got a lot out of India when he was here. So my discussion with him does not reflect the view (of being indifferent). He clearly loved Indian culture and he loved the food.
But it seems that Apple’s view of India in the past has been one of indifference and that India was sort of a blind spot for the company. Why has it taken over four decades for a CEO to visit India?
I don’t know the history before Steve’s come-back. I start after he came back. At the beginning it was about survival and initially it was about growing the Macintosh. That took several years working through iMac, iBooks... during that period, we were all focused on that, to get the company out of soup. Bringing iPod gave the company an added mission - about bringing music to everyone and serving artists. Thereafter, we had the iPhone and we started looking at those countries which we could be focusing on; countries which had the network that can unleash the power of the iPhone. In the beginning it was EDGE and then it was 3G and 4G. While we have been in India for a while, this seems like a great time to scale up when the priorities of the country and the company are in line; and I don’t mean only in terms of it being a market; yes, we would like to sell our products, but we see India as a significant source of talent. Not just for ourselves but also for the ecosystem. We have hundreds and thousands of developers in India but that number should be in millions. If we do the right thing in accelerating this and help them become entrepreneurs and then the selling can be done through the app store. India is also home to content creation, back to Apple’s reason for being. It’s all coming together now. We have thought through many areas and we will move ahead in all these areas. What we have announced in Hyderabad and Bengaluru are just a couple of initial things, there’s more coming. We are committed to India.
Most of the billion people in India may not have heard about Apple. A few million would have heard and seen Apple products and only the minority few, who can afford it, would have actually used an Apple device. How would you as the CEO, explain what Apple is to this Indian audience?
Apple is about making the best products, we only create products that enrich peoples’ lives and in doing that we change the world in a positive way. That, in a simple way, is what Apple is about. Think of our products as tools to learn, teach; they empower people to do things they could not do otherwise. That’s our reason for being and that’s what drives us.
India is a difficult market and it has different characteristics in terms of consumers’ purchasing power, retail distribution network, telecom networks... How different will be your approach here to other markets?
We are learning. There are things that are clearly different. But I would say there’s more things similar than different. The tendency is to magnify the difference and not look for similarity. The truth is that everyone wants the best product, not everyone may be able to grab it, but they want it. So when you start to look at it like that, you have a different perspective. We are patient people. We are not in India for a week or a quarter. We are in India for the next thousand years. Our horizon is very long. We are focused on best, not most. So it doesn’t bother me that we don’t have top market share. I don’t have the goal to have the top share next week or next quarter.
How do you see the regulatory environment especially with the Indian authorities disallowing you to bring in certified pre-owned phones? There is also the concern with the geospatial bill which could have an impact on your mapping services?
The people I have met with I have found them to be very open and they want to do the right things. They are open to hearing alternate points of view. I have a lot of faith that are our ideas would be listened to and we would get a fair hearing. On the certified pre-owned issue in particular, if you think about automobiles - brands like Lexus and Mercedes have been selling certified pre-owned cars. We have this programme in the U.S.and in most parts of the world. When they are sold they are sold with warranty, just like a new product. We would never sell a product that we didn’t think was right. We think it is good for people. It’s not the only solution but one part of puzzle. We would like to offer it and we hope we are able to articulate that clearly and we hope we can get an agreement. On maps, I am not sure about the objective there but I found the local authorities are very helpful and agile and keen to get foreign investment. I think if there is some issue they would be able to work through it.
Indian Prime Minister’s favourite project is Make-in-India and in that context there are reports that you are in talks with Foxconn to enable some form of manufacturing here. Could you confirm?
It is something we will look over time. On this particular trip we are focusing on the maps centre, which we have opened today, that will ramp up to 4,000 employees over the next few quarters, and then the app accelerator in Bengaluru, which is about encouraging developers and entrepreneurs. We are looking at India as a partner across, not just for any one area. Manufacturing is something logically we will look at.
What excites you and what worries you the most?
I am excited that I see more technology that help human kind and you begin to see the early stages of technology helping in major ways in health and in education its being taken to another level. I am excited about the number of ways technology can intersect in everyone’s life. If we can help people look better, live longer, have more enjoyment, get them to be productive, you can make a major shift in the world. So that’s something I love. In terms of losing sleep, the world is witnessing tense times across different parts so that’s worrisome. In the long-term, I am most optimistic. These kinds of things are speed bumps not permanent.
You spoke about 4G networks but some of the other tech firms like Microsoft and Google are trying to do their bit in speeding up network roll-outs. Do you see Apple participating in similar manner?
I have met a couple of operators and I am greatly encouraged to see really great investments and deep engineering that’s going on. I am really optimistic that by the end of year we are going to feel dramatically different with 4G. The best approach for India will be to bet on the operators. They really have a strong desire and scale, so I am very optimistic.
Apple so far has not been able to get a deal for bundling with any Indian telecom operator. Do you see that changing?
Telco partnerships are very important because it is the combination of incredible devices and incredible networks, that gives customers the ability to do unbelievable things. That marriage is important. But it goes back to the regulation question. Unlike in India, carriers in the US or Japan or China do sell phones. They may not be dominant players but they do sell. Here not so much because of the way the tax system works. You know it better than I do. What I sense is great technical collaboration between Apple and main carriers in India and to make sure the iPhone works incredible on those networks. The feedback I have thus far is very positive on that. We push really hard, in some ways they think we are crazy, but they love it as well that someone is pushing them hard to work together to solve the most difficult problem. Because it takes a handshake, it’s not that the network is independent of what’s on it…and we cannot develop products without knowledge of the network.
Bollywood and cricket are two big crowd-pullers. On a personal note, do you watch cricket and Hindi movies and do you see a partnership with the two from a business point of view?
I will watch cricket in the future, I have not sat through an entire game yet but I will. On the Bollywood side, we serve that community. When I toured some studios yesterday, I saw Macs everywhere. We give them tools that enable them to create content. I have seen the movies and am amazed at the content that comes out of India. What we can do best is that we can make sure that even more people see it. We have now have a billion activated devices in the world and we can highlight the content because everybody loves to see great content. So will we do partnerships? We already have partnerships. Will we do more? Perhaps! There’s a strong bond there and all relationships start with the bond.
Clearly, you are very bullish on India’s future potential. Can India become China for Apple?
India could, in all respects. But India shouldn’t try to be like anyone but itself, because India is fantastic. I think the multi-cultural nature of it, the warmth of its people… this is an advantage that is probably not well understood to the exterior world. I see a lot of positive things happen in the country and more will happen. From the GDP point of view there is no doubt in my mind that India will set new records. I can feel it will happen, all the ingredients are there.