In India, it had an even more compelling business case. Thanks to the country’s high taxation, the hardware lineup, from iPhones to MacBooks, was among the most expensive anywhere in the world. On the other hand, a burgeoning market for used iPhones meant it had a large number of users still coming into the ecosystem.
For instance, Morgan Stanley Research estimates that nearly 51% of the iPhones shipped to emerging markets during 2021 will be refurbished devices, compared to 32% in 2019. But four years since the shakeup, however, Apple’s services story in India is still largely a work in progress.
Service is the value-added that you provide to your customers after they buy your device.
All of the aforementioned names, except Sabharwal, have exited their roles. In some cases, executives roped in as replacements have moved on too. Apple also kept crucial roles vacant for a long time. For instance, the services team in India remained without a country lead for nearly a year before Ipsita Dasgupta (formerly with Disney+Hotstar) joined the team in June 2020.
The frequent exits from crucial leadership positions left Apple’s ambitions for services hanging, with many important projects changing hands over the years. Apple India declined to respond to a detailed questionnaire from us.
The company didn’t have an India-specific strategy—everything from marketing to pricing was seen through a global lens. And India-specific decisions, if any, had to be pushed through increasingly complicated hierarchies. Seeking approvals from international leadership and rolling out market-specific features is a multi-layered and lengthy process inside Apple, says the former Apple India executive.
Many of its services are included in the bundle, including Apple Arcade and Apple TV.
“The attrition was, in part, due to the fact that India-specific decisions saw unusually long delays,” they say. Building for India While the breakdown of refurbished Apple devices in circulation is unavailable, two industry sources estimate that, overall, Apple has more than 15 million iPhones in use across the country at present. This pales in comparison to Google’s Android OS, which has cornered a massive 96% of India’s smartphone market.
Apple iOS accounts for only 4%. And yet, Apple has far better levers for monetization. For instance, iPhone users are responsible for 40-50% of the revenue generated via mobile games, as there are more chances of them converting into paying users, according to industry estimates. “Services are the value-add that you give to your user after you sell your device. It is also the hook that we use to reel in more users. You are buying into a rich ecosystem when you are buying into Apple. If the ecosystem doesn’t work, then the whole thing comes crashing down,” the former executive explains.
In terms of revenue, it ranks second behind iPhones.
The services flywheel comprises offerings such as iCloud, Apple Music, App Store, and Apple TV. Globally, it is the second-largest contributor to revenue after iPhones—accounting for 28% of Apple’s revenue for the July-September quarter this year. Apple’s secret sauce is that it owns the entire funnel, allowing for seamless integration.
“The steep integration of hardware, software, and services have always defined our approach here,” CEO Tim Cook had said during an investor call earlier this year. In 2020, the company launched the Apple One bundle, hoping to make that proposition more attractive. The bundle brings together many of its services such as Apple Arcade and Apple TV+ under one subscription at discounted rates. Beyond subscriptions, the services arm also benefits from the 30% commission Apple charges for most purchases made on the App Store.