Mainly Macintosh

India: Why Apple Walked Away

Macintosh R&D is not to be - in India. Likewise, plans to do tech support via phone there also boomeranged.

Apple does not do technical support in the middle of the night. In the US, in the middle of the day - it is the middle of the night in India.

So, while Apple could probably find some folks with high tech aptitudes that are chipper there during US daylight hours, they would probably be in the minority.

One thing that has not gotten much notice in the media about the timing of Apple's decision to pull the plug on their Indian operation. It came just after the first group of employees returned from training. It might simply be that upon completion of their training, the Indian workers - at least the ones they hired - were not knowledgeable enough to man the tech support phone lines.

Now, other personal computer companies might not have a problem with that. But Apple has a reputation to protect.

Simply telling a Mac-owner in the US to buy a new computer when they phone India with a technical question would not cut the mustard.

While other PC makers try to catch up with Apple's 5-year lead in innovations, Apple has to also protect its reputation the cachet its brand-name holds among consumers.

Next year, it will be trying to convince consumers that its new Leopard (Mac OS 10.5) OS is the cat's pajamas - at the same time that its competitors are pointing to their own future Vista.

Apple cannot afford to let the current crop of Apple users get stuck if they want their next wave of sales growth to move unimpeded.

Instead of moving ahead with its growth into India, Apple bailed and India wailed. Businessweek Online has an article in it, in which they cite an unnamed source saying the reason was economic. Apple's spokespeople remain as tight-lipped in this article as they have in other ones about the reason for the aborted move. They only say that they will be expanding in other countries, instead.

BusinessWeek online:

....Yet he [Steve Jobs] is also a tough-minded executive who knows when to cut and run. That's why Apple Computer Inc. has shelved plans to build a sprawling technical support center in Bangalore, even as IBM and other tech powers are ramping up. Just three months back, Apple appeared to be on the same trajectory, and there was talk of the company hiring 3,000 workers by 2007 to handle support for Macintosh computers and other Apple gear. Many in India even speculated that Jobs might travel there this year to publicize Apple's commitment to the country.

It wasn't meant to be. In late May, Apple dismissed most of the 30 new hires at its subsidiary in Bangalore. (A handful working in sales and marketing will stay on.) Spokesman Steve Dowling would say only that Apple had "reevaluated our plans" and decided to provide support from other countries.

Another source familiar with the situation, though, says the decision was cost-driven. "India isn't as inexpensive as it used to be," the source says. The turnover is high...

A huge segment of the Indian computer-technology work force will probably catch up with a comparable sized chunk of the US work force within ten or twenty years.

Apple can afford to wait while other companies pay for the OJT investment that will require. Meanwhile, India will be fixing its unreliable power problems, sorting out issues with its sometimes surprisingly expensive in-country communications, tackling lingering corruption problems that beleaguer foreign companies making an investment, and other soft costs of doing business in India.

Apple can always come back again in five or ten years. They might find those things have improved across the board. Sure, wages will not be cheap then once those problems for US companies sorted out. There will be a lot more people with the training and experience that Apple is looking for, though. Some of them will already be long-time Mac customers themselves.

Apple's best-selling iPod music playing appliance had a little bit of its circuitry designed in India, the article points out. So, even if Apple does not do business with the Indian service industry - India's high tech Industry is still getting deals and making money, thanks to Apple.

Since the iPod has such a great reputation - that has a certain cachet too!

posted by John Collins @ 11:40 AM