Source: LiveMint.com, May 20, 2016

Hyderabad: Apple Inc., the maker of iPhones and iPads, on Thursday opened its first development centre in India in Hyderabad, which will work on Apple Maps, the company’s digital maps and navigation service.

Apple chief executive Tim Cook, who is visiting India for the first time, opened the facility in Hyderabad, which will employ 4,000 people. The company did not specify how much it would invest in the facility.

Not all of the 4,000 employees at the facility will be on the rolls of Apple. A majority of the workforce at the facility will be employed by Noida-based RMSI Pvt. Ltd., which provides geospatial and software services. Apple is partnering with RMSI, an authorized reseller of Google Earth Enterprise and Google Maps, according to its website, for the Apple Maps project.

“Apple is focused on making the best products and services in the world and we are thrilled to open this new office in Hyderabad which will focus on Maps development,” Cook said in a statement on the website of Apple, the world’s biggest company by market value.

The Maps product of Apple got off to a rocky start when its rollout in 2012 mutated landscapes and led people to incorrect addresses, leading to firing of then Maps product head Richard Williamson and then iOS head Scott Forstall.

The Maps fiasco also prompted CEO Cook to issue an apology and ask customers to use digital cartography products of rivals such as Google Inc., Microsoft Corp. and Nokia Oyj. Google Maps is the world leader in the digital maps category.

Apple has since worked on its Maps application, updating and adding features such as 3D views and tools to help customers find convenient places to shop, eat and explore nearby areas. It also added Transit feature with iOS9 to help people in 300 cities navigate using a combination of trains, subways, buses and walking.

“Apple is one of the most innovative companies in the world and we are very proud they chose us to partner with for this important project,” Anup Jindal, CEO of RMSI, said. “We are experts in geospatial data and we will be hiring thousands of people from the local area to support this effort.”

Amit Rishi, marketing head of RMSI refused to comment on the nature of the company’s engagement with Apple.

Companies like Google and Yahoo, apart from local players MapmyIndia and SatNav Technologies, have developed online maps out of India. “That makes a natural choice for India to be a place where they would like to have this kind of development centre. If you look at it, Apple is looking not just on device sales but if you look at service part of it, it is $16 billion, and Maps plays a critical role in that,” Ashootosh Chand, executive director and leader of digital practice at PricewaterhouseCoopers India, said. “It is strategic in nature and I wouldn’t be surprised if they keep doing more software out of India.”

Without revealing details, Cook said the company would “introduce” more universities and partners around Hyderabad to Apple’s platforms as the company scales its operations. Anand Bhaskaran, an Apple spokesperson, could not be reached on phone for more details. Media was not allowed to cover the inauguration of Hyderabad facility.

Apple on Wednesday said it will open an app design and development accelerator in Bengaluru, India’s startup hub to help developers build apps for its platforms. Across India, Apple supports over 640,000 iOS app developer jobs and other positions related to the iOS ecosystem.

Cook’s visit to India comes at a time Apple is looking at emerging economies to spur sales to offset stagnating growth in mature markets in the West and in China.

Apple had its first double-digit year-on-year decline during January-March quarter with iPhone sales down 14% globally, technology researcher Gartner Inc. said in a report on Thursday.

“I view India as where China was maybe 7-10 years ago from that point of view, and I think there’s a really great opportunity there,” Cook told analysts in a recent earnings call. More than a billion smartphones will be sold in India over the next five years, according to technology research firm Counterpoint.

While India is projected to become the world’s second biggest smartphone market, experts say it will be long-drawn game. Average selling price of a phone in India is very low compared to the US or China, and a vast majority of the country’s population is slowly warming up to the smartphone ecosystem dominated by Samsung Electronics Co. Ltd., Micromax Informatics Ltd., Lenovo Group Ltd. and Intex Technologies (India) Ltd.

“That’s a long term story,” Anshul Gupta, research director at Gartner said.

Many people in India are only now buying their first smartphone or have bought their first smartphone over the past 2-3 years, graduating from Rs.5,000 feature phone sets. “You cannot expect all of them to buy Rs.50,000 phone. It will be second or their third smartphone where you could see some of them willing to spend a higher price for a smartphone,” he said.

The company’s plan to import and sell cheaper refurbished iPhones to court price-conscious Indian consumers was rejected by the government because it could lead to electronic waste dumping in the country. Besides, it could have disrupted the government’s Make in India initiative that promotes local manufacturing.

The Telangana government invited Apple to set up a manufacturing facility and offered land to the company to set up its campus in Hyderabad on the lines of Google and Amazon.com Inc., which are building their biggest campuses outside the US in the city.

But the company doesn’t seem to have any immediate plans to manufacture out of India.

Telangana information technology minister K.T. Rama Rao told Mint that Apple has not conveyed its decision but could consider the state when it eventually makes up its mind to open a company-owned facility in India.

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