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$213.5 million - Indian Unit - for “long-term investment” $16.5 million - Vietnamese Unit - "for operations and sales" Easy to see where the major investment

by ktta 8y ago

$213.5 million - Indian Unit - for “long-term investment” $16.5 million - Vietnamese Unit - "for operations and sales" Easy to see where the major investment is. I see this is as a clear intent to start putting roots in the Indian market, especially since regulations for international phone imports in India are sometimes prohibitive. Though this move isn't to manufacture iPhones right now, they might be making a strategic move to be appealing to Apple, to produce more phones (a future cheap - XR like version maybe?) in India. That would be in addition to the production already in place in India for some iPhones. Apple still has the brand awareness in India. The iconic Apple logo's power has yet to die. I'm not sure if they expect to sell high end iPhones about $1000+ in volume, because they will fail. One because that isn't cheap even for American blood. And the concept of monthly payments for a phone (price exceeding most two wheelers' prices -- a popular mode of transport) won't sit well with people there, especially devoid of all the carrier incentives in the states. This is also following rumors from a bit ago - https://www.reuters.com/article/us-apple-india-exclusive/exclusive-foxconn-to-begin-assembling-top-end-apple-iphones-in-india-in-2019-source-idUSKCN1OQ0M6 https://www.reuters.com/article/us-apple-india-exclusive/exc...

latchkey 8y ago
China and Vietnam don't really get along. I see that as more of the factor than anything else. People in Vietnam love iPhones and Apple... the logo is everywhere. China is investing heavily in Sihanoukville, Cambodia because it is a major seaport that isn't Vietnam and because the Cambodian's were more happy enough to get some much needed income. I am also guessing the Chinese have a lot of saved up USD they'd like to spend and Cambodia is based on USD. I wouldn't be surprised if we see more news from there over time. It is a great way for them to bypass the tariffs.
chvid 8y ago
I thought Apple's new facilities in India had something to do with India's import restrictions: "More iPhones made in India may also help Apple to hit a requirement of 30% locally-made products in order to get government clearance to open Apple Stores in the country." https://9to5mac.com/2018/12/27/iphones-made-in-india/ https://9to5mac.com/2018/12/27/iphones-made-in-india/
- ktta 8y ago
  Exactly, which was my point.
- thisisit 8y ago
  Single brand retail chain ownership was restricted in India. A foreign entity could only own up to 51% in a single brand retail chain. That has changed last year in Jan 2018. So, the article claiming the issue was 30% locally made products in 2016 doesn't seem right.
mtgx 8y ago
Apple and "cheap" are like oil and water - they don't mix. The last time Apple offered a "cheap" phone (read: still expensive for India" it cost like 500 USD in India.
- ktta 8y ago
  I might be doing some arm-chair psychological claims right now, but, here's my opinion. The phones being expensive is what makes them appealing. Apple is the undisputed king of branding. They're selling a lifestyle. Everyone wants a taste of the high life, and while the cheap version of the iPhone might not be 500 USD, it needs to get close to the prevailing flagships in India with little tariff overhead. iPhones incur an insane markup in India right now, so they'll want to reduce that, atleast close to the price in the US.
  - benj111 8y ago
    "The phones being expensive is what makes them appealing" Well yes, they're a status symbol, no need for the arm chair. People may rationalise how it does y better than the competition, but there very few people where the better y is worth the extra $xx. I'm reminded of this: https://en.m.wikipedia.org/wiki/I_Am_Rich https://en.m.wikipedia.org/wiki/I_Am_Rich Edit: I'll admit its hard to tease out utility differences here. This isn't a rolex situation where the cheaper alternative is 'better'. Although I could cite the gold iPhones as purer examples. The fact remains, a mid range android phone gets you 95% of what you want a smartphone to have. The iphone proposition is nice to have, not need to have.
    - ktta 8y ago
      > but there very few people where the better y is worth the extra $xx. You did bring up Rolex, but it isn't that simple. Phones have much more variety and depth of utility than watches. While a watch's quality of function will not really vary between a $15 digital one and a $1000+ one, phones' functionality will. That's part of what makes expensive phones worth it, because they have good software and quality to go along with design. > The iphone proposition is nice to have, not need to have. That assumes phones are purely utilitarian.
onlyrealcuzzo 8y ago
India's top 5% can afford a $1000 phone somewhat easily. India's top 5% is about 65 million people. That's a lot of potential volume. Will the iPhone be main stream in India? No, of course not. But India could still be a bigger market than California, especially if India's GDP continues to rise at ~6% per year.
- ktta 8y ago
  That same top 5% who want the $1000 iPhone, already have the $1000 iPhone. They don't care about the additional cost due to tariffs, hence not a point in this conversation.
  - onlyrealcuzzo 8y ago
    You are right to some extent. Some portion of that market that wants an iPhone is already getting one, sure. But some portion of that market isn't as well. I can afford a $10k iPhone, but there's no way I'd buy one at that price. Price matters to almost everyone beside the top 0.1%.
    - muro 8y ago
      Don't people travel? Why not by it abroad if the price is so much higher locally?
      - rootusrootus 8y ago
        Some do. One of our developers came to the U.S. for a visit and went home with four brand new iPhones.
sonnyblarney 8y ago
The investments are effectively commensurate with population size, so not that far of equity by one measure.

by ktta 8y ago

latchkey 8y ago

China and Vietnam don't really get along. I see that as more of the factor than anything else. People in Vietnam love iPhones and Apple... the logo is everywhere. China is investing heavily in Sihanoukville, Cambodia because it is a major seaport that isn't Vietnam and because the Cambodian's were more happy enough to get some much needed income. I am also guessing the Chinese have a lot of saved up USD they'd like to spend and Cambodia is based on USD. I wouldn't be surprised if we see more news from there over time. It is a great way for them to bypass the tariffs.

chvid 8y ago

I thought Apple's new facilities in India had something to do with India's import restrictions: "More iPhones made in India may also help Apple to hit a requirement of 30% locally-made products in order to get government clearance to open Apple Stores in the country." https://9to5mac.com/2018/12/27/iphones-made-in-india/ https://9to5mac.com/2018/12/27/iphones-made-in-india/

ktta 8y ago
Exactly, which was my point.
thisisit 8y ago
Single brand retail chain ownership was restricted in India. A foreign entity could only own up to 51% in a single brand retail chain. That has changed last year in Jan 2018. So, the article claiming the issue was 30% locally made products in 2016 doesn't seem right.

mtgx 8y ago

Apple and "cheap" are like oil and water - they don't mix. The last time Apple offered a "cheap" phone (read: still expensive for India" it cost like 500 USD in India.

ktta 8y ago
I might be doing some arm-chair psychological claims right now, but, here's my opinion. The phones being expensive is what makes them appealing. Apple is the undisputed king of branding. They're selling a lifestyle. Everyone wants a taste of the high life, and while the cheap version of the iPhone might not be 500 USD, it needs to get close to the prevailing flagships in India with little tariff overhead. iPhones incur an insane markup in India right now, so they'll want to reduce that, atleast close to the price in the US.
- benj111 8y ago
  "The phones being expensive is what makes them appealing" Well yes, they're a status symbol, no need for the arm chair. People may rationalise how it does y better than the competition, but there very few people where the better y is worth the extra $xx. I'm reminded of this: https://en.m.wikipedia.org/wiki/I_Am_Rich https://en.m.wikipedia.org/wiki/I_Am_Rich Edit: I'll admit its hard to tease out utility differences here. This isn't a rolex situation where the cheaper alternative is 'better'. Although I could cite the gold iPhones as purer examples. The fact remains, a mid range android phone gets you 95% of what you want a smartphone to have. The iphone proposition is nice to have, not need to have.
  - ktta 8y ago
    > but there very few people where the better y is worth the extra $xx. You did bring up Rolex, but it isn't that simple. Phones have much more variety and depth of utility than watches. While a watch's quality of function will not really vary between a $15 digital one and a $1000+ one, phones' functionality will. That's part of what makes expensive phones worth it, because they have good software and quality to go along with design. > The iphone proposition is nice to have, not need to have. That assumes phones are purely utilitarian.

onlyrealcuzzo 8y ago

India's top 5% can afford a $1000 phone somewhat easily. India's top 5% is about 65 million people. That's a lot of potential volume. Will the iPhone be main stream in India? No, of course not. But India could still be a bigger market than California, especially if India's GDP continues to rise at ~6% per year.

ktta 8y ago
That same top 5% who want the $1000 iPhone, already have the $1000 iPhone. They don't care about the additional cost due to tariffs, hence not a point in this conversation.
- onlyrealcuzzo 8y ago
  You are right to some extent. Some portion of that market that wants an iPhone is already getting one, sure. But some portion of that market isn't as well. I can afford a $10k iPhone, but there's no way I'd buy one at that price. Price matters to almost everyone beside the top 0.1%.
  - muro 8y ago
    Don't people travel? Why not by it abroad if the price is so much higher locally?
    - rootusrootus 8y ago
      Some do. One of our developers came to the U.S. for a visit and went home with four brand new iPhones.

sonnyblarney 8y ago

The investments are effectively commensurate with population size, so not that far of equity by one measure.