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  • This video is sponsored by Brilliant.

  • The first 200 to use the link in the description get 20% off the annual premium subscription.

  • India is home to 1.3 billion people.

  • In just five years, it'll pass China and become the most populous country on the planet.

  • And, it shows.

  • The streets are chaotic, markets, overcrowded, and its economy, bursting with potential.

  • While it's still decades behind on basic infrastructure like schools and sanitation,

  • India's GDP is among the fastest growing in the world.

  • Which, for companies, means 1.3 billion potential customers, Many of whom are using the internet

  • for the first time ever.

  • Where Amazon, Google, and Uber struggle to enter and compete with locals like Baidu and

  • Alibaba in China, they've largely succeeded in India.

  • With one big exception: Apple is almost nowhere to be found.

  • The iPhone is an unstoppable, money-making machine, more successful than Boeing's 737,

  • Toyota's Corolla, and the entire Star Wars franchise.

  • And yet, here, it only commands about 1% of the whole smartphone market.

  • Just in the last year, its government threatened to ban the iPhone over a disagreement about

  • privacy, Apple reportedly lost three key Indian executives, and it failed to get approval

  • for an official retail store.

  • It's safe to say things aren't going so well.

  • So, what makes India so different?

  • And what does it mean for the future of Apple?

  • This is the sales miracle known as the iPhone.

  • Apple went from selling 1 million in 2007, to 11 in 2008, All the way to a record-breaking

  • 231 million in 2015.

  • Turns out people like bigger phones.

  • The trend couldn't be more clear.

  • But then, something changed.

  • In the last three years, sales have beenflat.

  • And, if we look at all smartphones, you can see Apple is no exception.

  • What was 40, or 50, or even 60 percent growth, has now become zero.

  • Now, ifflatmeans consistently selling 200 million premium devices year after year,

  • well, that doesn't sound so bad.

  • The iPhone isn't declining, it's justnot growing.

  • But Apple, of course, is a public company, and the stock market is based on the expectation

  • of growth.

  • It's not enough to make an unbelievable amount of money.

  • It needs to make an unbelievable amount more than last year.

  • Which brings us, back to the basics:

  • There are three ways Apple can sell an iPhone.

  • Someone buying their first smartphone, Someone switching from a competitor, or someone upgrading

  • their current iPhone.

  • The first two have been incredibly fruitful, and are still responsible for millions of

  • sales.

  • But there are only so many humans on Earth, And, at least for now, Apple is not in the

  • business of making more.

  • Which brings us to the third category: the customers it already has.

  • For the average person, two-year upgrades are becoming three or four, or whenever this

  • phone dies upgrades.

  • Premium smartphone companies are in the business of making better, longer-lasting devices that

  • will entice more people to upgrade.

  • But that also makes them less eager to upgrade in the future.

  • It's a tough game to play.

  • We've reached a point where most people are mostly happy with what they have.

  • In some ways, Apple is too successful for its own good.

  • Today, it may sell the same number of phones, but more profit is being made, thanks to the

  • higher prices of the X and XS.

  • Plus, existing users are valuable in more ways than one - we buy Apple music, iCloud

  • storage, Apple Watch, AirPods, and soon, Apple streaming video.

  • So, this graph, the company argues, can only say so much.

  • That's why it no longer publishes the number of phones sold.

  • Sure, sales may be flat, but the average selling price is anything but.

  • The last two years have proven people are willing to pay eleven, twelve, fourteen hundred

  • dollars.

  • In other words, this strategy is working.

  • But it can't go up forever.

  • Somewhere there's a limit.

  • And that's why emerging markets are, if not existential, at least very important for

  • the future of the company.

  • So, Apple, in need of customers, meet, India, in need of phones.

  • 63 thousand Indians are pulled out of extreme poverty every day.

  • And companies can hardly wait.

  • Now, in terms of raw GDP, India ranks an impressive sixth place, right behind the United Kingdom.

  • But, adjusted per capita, it's only $1,939 to China's $8,827.

  • Meanwhile, the cheaper iPhone XR starts at $749.

  • And that's if you're a lucky American.

  • In India, the price is 77 thousand Rupees, Or around eleven hundred dollars.

  • And again, that's the cheaper model.

  • The XS, on the other hand, is upwards of $1,420.

  • Here, Apple's strategy of raising prices is backfiring.

  • An estimated 75% of smartphones are sold for less than $250.

  • And 95%, less than 500.

  • For most people, the iPhone is simply too expensive.

  • Even the much older iPhone 6 and SE, are sold at relatively high prices.

  • For that kind of money, customers expect a brand new phone, not a 3 or 5 year old one.

  • Most Indians don't even buy smart phones, but basic, feature phones like the JioPhone,

  • which is effectively free with a small, refundable deposit.

  • So, the iPhone is a tiny sliver of the premium market, which is only a small segment of smartphone

  • sales, which, account for less than half of all phone sales.

  • There's just not that much pie left.

  • Now, Apple has never purely been driven by unit sales or market share.

  • For the most part, it's just not interested in selling to all price points.

  • But this market share is barely even noticeable.

  • Unfortunately, price is only one part of the problem.

  • It also lacks brand recognition, Is affected by a weaker currency, plus tariffs, And even

  • for those that can afford it, the iPhone in India just isn't as good a product

  • It lacks Apple Pay, Apple Maps is, let's say limited, and Siri still has trouble understanding

  • local accents.

  • Some of Apple's most undervalued assets are its over 500 retail stores across 19 countries.

  • It builds giant glass cubes, renovates historic theaters, and practically defies the laws

  • of physics.

  • Not because it's cool, well, not just because it's cool, but because they make insane

  • amounts of money.

  • No other company makes more money per square foot of retail space.

  • And if you have any doubt about that, I dare you to walk through one without bumping into

  • anyone.

  • But, all this means nothing in India.

  • Here, phones are sold in small, local shops where brands have little to no control.

  • Not the best conditions for a company which regulates the height of its tables.

  • And, at least for now, it legally can't open a store.

  • The Indian government requires that any foreign-owned company buy at least 30% of its materials

  • within the country before opening a retail store.

  • In response, Apple has started manufacturing the SE and 6S in India, which it may soon

  • do for newer phones as well.

  • In the meantime, Chinese brands like OnePlus, Oppo, and Vivo, carefully target the Indian

  • market by producing low-cost, locally-manufactured devices.

  • Ultimately, the reason Apple can't compete is simple: it's not willing to adapt.

  • The company has all the resources in the world, but unless it makes a significant change in

  • strategy, India will never be the next China.

  • The iPhone accounts for over 60% of Apple's total revenue, to continue growth, it has

  • no choice but to do what Apple does best - destroy its own, thriving product with an entirely

  • new category.

  • Since reaching a one trillion dollar market cap, Apple stock has been unusually shaky.

  • Sometimes this is significant, sometimes it's normal, market fluctuations.

  • And you can tell the difference by understanding ideas like statistical variance, which you

  • can learn with Brilliant.

  • You don't wanna panic and sell here, which is why this knowledge pays off.

  • That's the power of topics like math, logic, and machine learning combined with economics.

  • You can see a business from a whole new perspective.

  • If you like learning new things, and, clearly you do, you'll love the way Brilliant helps

  • you understand new ideas, not just memorize their formulas.

  • To get started, go to brilliant.org/Polymatter and sign up today for free.

  • The first 200 people to use that link will also get 20% off the annual Premium subscription.

  • Thanks to Brilliant for sponsoring this video, and to you for listening.

This video is sponsored by Brilliant.

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Appleがインドで失敗する理由(&なぜそれが重要なのか (Why Apple Fails in India (& Why it Matters))

  • 149 1
    李柏毅 に公開 2021 年 01 月 14 日
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