Apple, Inc. Is Still Working on Cracking India

Image source: Apple.

For years, Apple (NASDAQ: AAPL) has tried to make inroads within the world's second-most populous country. The iPhone maker has struggled to make much progress due to a wide range of structural challenges associated with expanding its presence.

Four years ago

Earlier this year, Finance Minister Arun Jaitley rejected

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Another piece of the puzzle

The Economic Times

Having devices manufactured in India would help reduce the import tariffs that drive up the costs of iPhones and other imported products. It's worth noting that even if Apple is able to successfully get incentives to expand manufacturing, there are still other challenges that it faces. The incentive wouldn't directly affect Apple's ability to set up its own retail stores, which would theoretically go a long way with improving distribution and owning the customer purchasing experience. iPhones are still prohibitively expensive to the vast majority of average Indian consumers, which is why Apple has just a 2% market share, according to Strategy Analytics.

It's not too late

CEO Tim Cook has been talking about Apple's opportunities in India for years, so it doesn't inspire much confidence that the company has made such little progress over this amount of time. Of course, it's extremely hard to compete when local rules and regulations have stacked the deck against you, but it's also probably true that India isn't at the top of Apple's priority list right about now.

That being said, Cook did add some color around India on the last quarterly conference call, noting that iPhone sales in fiscal 2016 were up 50% in India. There's also been a lack of network infrastructure:

On India, I think it's important to look not only at per-capita income, which may be what you're looking at, but sort of look at the number of people that are or will move into the middle class sort of over the next decade. And the age of the population, if you look at India, almost 50% of the population is under 25. And so you have a very, very young population.

The smartphone has not done as well in India in general. However, one of the key reasons for that is the infrastructure hasn't been there. But this year or this year and next year, there are enormous investments going in on 4G and we couldn't be more excited about that because it really takes a great network working with iPhone to produce that great experience for people.

The reality is that Apple probably does have plenty of time, considering the demographics of India as well as the socioeconomic landscape. If the population is still young and the middle class hasn't hit critical mass yet, Apple may be able to bide its time as it tries to line up all the other pieces of its strategy.

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Evan Niu, CFAfree for 30 daysconsidering a diverse range of insightsdisclosure policy