The Indian Finance Ministry's decision to knock back
an Apple exemption that would have freed it from a requirement that 30 percent of a future Apple Store's content must be made locally came with a particularly puzzling explanation: Apple's products, it said, were not"state-of-the-art" or "cutting-edge," which at first strains credulity. Unless the decision is reversed, it means Apple's goal to open at least three Apple Stores in India by 2017 will have to be put on the backburner, which is a significant blow to Apple's current plans for the country.
Just this week, opening its own stores in India was called out as a top-five priority
for the company. Making matters worse for Apple, the decision comes immediately on the heels of a high-profile tour
of the country by senior Apple execs, headed by CEO Tim Cook. But is the Indian government correct?
Assuming the decision stands, it will be very difficult -- if not impossible -- to set up Apple Stores in the country without an exemption from the local requirement that 30 percent of the products stocked in any Apple Store be either manufactured or produced in the country. Even though Apple's key manufacturing partner, Foxconn, is looking to invest $10 billion
in setting up an Indian-based manufacturing plant dedicated to the manufacture of Apple products in the country, it will be at least a couple of years before that project is up and running. With Apple Stores a magnet for consumers keen to open their wallets for its products, the decision will certainly impact on Apple's Indian operations -- right at a critical juncture when it needs to be gaining momentum in what is shaping up as a key market for the company.
iPad Pro 9.7
Regardless of what you think about the general state of technology in India or Indian society at large, with its vast social gulfs, the Indian Finance Ministry is said to have given Apple's exemption request a thorough review. Apple, for its part, it is claimed, did not present sufficient material evidence to support its assertion that its product line up met the criteria for Apple to be given the exemption that it had sought. It is possible that whomever was responsible for submitting Apple's application for exemption may not have given the application the due diligence it required, operating under the assumption that getting the exemption would be a fait accompli -- it wouldn't be the first time a multinational has taken its global status for granted.
It is possible that Apple could "work around" the issue by favoring Made-in-India goods in some of its other departments, particularly accessories -- but there may not be enough such items of high enough quality to add up to 30 percent. It would be even more embarrassing, however, if Apple were to resubmit its request, only to be knocked back a second time. What are the chances of that? Probably quite high, unfortunately. In the cold light of day, we can admit that while quite a number of Apple's products are still "state of the art," many are not "cutting edge" anymore -- and in some cases, haven't been for some time.
While Apple's current product lineup is still selling exceptionally well, when we think of "cutting edge," we would have to admit that primarily, that is represented by the 12-inch Retina MacBook, the Magic Trackpad, Apple Pay, Touch ID, the Magic Trackpad, 3D and Force Touch, the Apple Pencil, and perhaps the iPad Pro (the forthcoming MacBook Pro refresh may add to that number, but this remains to be seen). One could argue that a lot more of its products and services are "state of the art," and it is there that we feel the Indian Finance Ministry has erred somewhat.
There are many smartphones that resemble the iPhone, but time and time again the experts will tell you: the iPhone is the best all-around smartphone. The iPad, the best tablet. OS X, the best operating system. Many of Apple's products, software and services -- from the Apple Watch to iBooks Author to the App Store -- truly define "the state of the art." Furthermore, who in their right mind would not agree that the 5K Retina iMac is not both the state of the art in desktop computers, as well as the cutting edge for creative professionals?
One could also argue that even for products that have aged a bit, like the MacBook Pro line or the Mac Pro, that these and most other things Apple produces are made using state-of-the-art or cutting-edge manufacturing processes, too. The friction stir-welded iMacs, and the unibody MacBooks are good examples of these. We feel that perhaps the Indian Finance Ministry didn't look as deeply at that as perhaps they should have, but it's possible that this isn't of interest to the ministry just yet ... unless and until Apple moves to put some manufacturing into India.
Perhaps the expected forthcoming refresh of the MacBook Pros will help change the ministry's mind, and show that Apple's products are mostly "state of the art." Currently, the present models aren't even fitted with Intel's latest silicon, while they continue with older technologies like Thunderbolt 2, and standard USB 3.0 sockets, when the competition has moved on with Intel "Skylake" chips, Thunderbolt 3, and USB-C 3.1. The 27-inch iMacs have got Intel's latest silicon, but the 4K 21-inch iMac is still fitted with a hopelessly dated 5,200rpm spinning hard drive.
Even the 27-inch iMacs lag with older I/O technology, while the once state-of-the-art Mac Pro is now languishing without an update after nearly three years. Even the otherwise excellent iPhone SE is based on a three-year old design, though it still represents "the state of the art" when looking at smaller smartphones -- it is far and away the fastest and most powerful phone of that screen size available, or indeed ever made. The same goes for much of Apple's iPad lineup, which is either fitted with slightly older chips like the A8 -- even though it is still the best chip in its class, only outpaced by Apple's own A9, but miss out on support for the Apple Pencil and 3D Touch, and continue with USB 2.0 tech for connectivity. We won't even discuss the Mac mini line up.
Although the iPhone 6s includes cutting-edge technologies like its A9 chip and its 3D Touch display, it is still mixed with standard technologies like the 1080p LCD display, fitted to the 5.5-inch Plus model, and the 750p LCD display fitted to the standard 4.7-inch model. While you can successfully argue the case that it isn't essential that these are fitted with better displays, it still doesn't make them "cutting-edge." Most mid-range Android handsets have 1080p displays, while all the high-end, cutting-edge Android models are fitted with either quad-HD displays or even 4K Ultra HD displays in some cases.
The same goes for much of Apple's iPad line up, which is either fitted with slightly older chips like the A8, but miss out on support for the Apple Pencil and 3D Touch, and continue with USB 2.0 tech for connectivity. We won't even discuss the Mac mini line up.
Apple at its best, as seen in the iPad Pro line up and the 12-inch MacBook, is absolutely "cutting-edge." However, when you look at its overall product lineup, it really is a mixed bag when you examine things a little more closely. As a result, the Indian Government's decision can only be called "not entirely unfair." You can argue the merits for and against its 30 percent locally-sourced product requirement, and you can say that quite a few products -- and much of the engineering behind them -- is still "state of the art."
That said, there is no denying the fact that time Apple takes between updating some of its products has finally come back to bite it. Had it ensured that products like its iMacs, MacBook Pros, Mac Pro, and others were more regularly (or at least routinely) refreshed with the latest in state-of-the-art or cutting-edge technology when it becomes available, Apple might have some reasonable gripes about the decision to make its case for a reconsideration. As it has not, it has no one but itself to blame for this ruling.
-- Charles Martin and Sanjiv Sathiah