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Three executives quit Apple India as it reworks country strategy: Report

Coinciding with the supposed restructuring of Apple India’s sales team, three of its senior executives are said to have exited the company in recent weeks, a report from Bloomberg said. The three executives include Rahul Puri, head of national sales and distribution, Jayant Gupta, head of operator business and iPhone sales, and Manish Sharma who was the national sales head of telecom, reports said. Furthermore, considering that more exits — especially from the ‘mid-level’– are on the cards, Apple will likely have a completely new team to handle sales in India, the ET report said quoting sources in the company. The move is seen as a result of the change in Apple’s strategy, brought in by the company’s new head of India operations Michel Coulomb, to boost its struggling sales in the world’s fastest-growing smartphone market.

According to the Bloomberg report that cites Counterpoint research, the company accounts for 2% market share in India and has managed to sell about 3.2 million iPhones in 2017. The sales dropped further in 2018, the report added. Even if Apple manages to achieve a strong second half in 2018, it is unlikely to top the sales of the previous year, Counterpoint research director Neil Shah told Bloomberg.

A shift in strategy

ET reported that Apple’s top brass in Cupertino was unhappy given that the company’s market share in India remained stagnant at 2-3% over the last five years under the previous head Sanjay Kaul, who had been pushing sales through discounting and rapid expansion. Reports also claimed that several of Apple’s trade partners — especially the franchisee-owned exclusive Apple Premium Resellers and large retail chains — were said to have been unhappy with Kaul’s strategy since the discounting was eroding product prices and favouring online stores.

According to ET, with Coulomb in charge, the company wants to increase its market share by selling only at stores that can provide a complete sales experience and clamp down on smaller ‘neighborhood’ stores. Apple has also stopped selling Mac computers from such stores, an exercise it had started last year, reports ET.

Apparently, under Kaul, money previously allocated for the channel development fund was instead used to offer discounts to distributors and retailers, ET claimed. However, the inception of a new sales audit team under chief financial officer Gaurav Duggal has now has put this practice to end, says the ET report

The news follows reports claiming that the world’s most valuable company is also rejigging its distribution system in India, moving from five national distributors to two distributors. Apple India will retain only two national distributors — Ingram Micro and Redington. Three others Brightstar, Rashi Peripherals and HCL Infosystems will be phased out by next year March, the ET report claimed.

Stuck between a rock and a hard place

Most commentators claim that Apple, in India, is stuck between a rock and a hard place: It cannot expand its customer base in India without cutting prices, but cutting prices would undermine its long-term “aspirational value, for which it charges the premium. The company opted to boost its activities in the country by recently starting to manufacturer its mid-range iPhone SE and iPhone 6S models in India, apart from setting up an app accelerator and a mapping development center. However, it still fails to boost the sales of its high-end/flagship products given that they are not manufactured locally and therefore attract high taxes on top of the premium it already charges. The intense competition in the mid-end category, not just from Chinese brands but also from international and local players alike, sees to it that Apple’s market share in the country doesn’t see any substantial increase.

Contradictory to its market positioning and performance, Apple CEO Tim Cook, while on a tour of India, said he was “very bullish” and “very optimistic” about the company’s Indian future. Cook went on to suggest that India could be the next China in terms of mobile sales. China is Apple’s ssecond-biggestmarket after the US. Given the state of Apple In India, it’s fair to say that Cook is a long, long way off the mark.

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