Israeli Tech: Apple Establishes a Stronger Presence in Israel
About Israeli Tech: The ‘Israeli Tech’ column is a forum for both in-depth explorations of specific start-ups, as well as broader, industry-based analyses. It not only enables readers to learn about and appreciate the tech wonders that have emerged from Israel in the past, but also provides a glimpse of the technology being developed today that may change our lives in the future.
In a mid-February excursion to Israel, Tim Cook, CEO of Apple, met with current Israeli president Reuven Rivlin, as well as former president Shimon Peres. As The Times of Israel reported, Rivlin remarked how much of a privilege it was to have Cook in Israel: “Even for me, as one who prefers to write with a pen and paper, it is clear what a great miracle you have created when I look at my staff and my grandchildren.”[1] Cook thanked Rivlin for his kind words, saying that he and his staff “have an enormous admiration for Israel, not just as an important ally for the US, but as a place to do business.”[2]
Since assuming office, Rivlin has worked towards the further inclusion of minority groups in Israel. In their conversations, Cook and Rivlin touched on issues relating to the environment, education, and diversity. In particular, they discussed how Apple could help ensure that marginal groups in Israeli society like Arabs and ultra-Orthodox Jews could be further included in Israel’s high-tech scene. Cook brought Apple vice president of hardware technology Johny Srouji along on his trip. Srouji is an Israeli-Arab from Haifa who has ascended the ranks to a top position in Apple. The Israeli government has been endeavoring to boost Arab participation in Israeli high-tech, with a recent government allotment of $2.5 million to two organizations that will help provide training and job-placement services for Arab, Druze, and Circassian academics.
Cook’s visit, which came after weeks of speculation that he might be making a trip to the “Start-Up Nation,” was mainly for the purpose of opening up a new research and development center in Herzeliya. According to a Jerusalem Post report, the new R&D center is 134,550 square feet and will employ 800 employees. It will house Apple Israel's development center and marketing and sales division.[4] With the addition of this new R&D center, Israel will become the home for Apple’s second-largest engineering facility in the world.[5]
Aside from the new R&D center in Herzliya, Apple actually has a somewhat lengthy history in Israel. Back in December of 2011, Apple bought out Anobit, a Haifa-based maker of flash memory controllers that Apple has since integrated into many of its products. After the acquisition, Anobit was turned into an Apple R&D center, and its 200 employees, three quarters of whom are engineers, became Apple employees. Since that time, the original Haifa R&D center has hired dozens more employees, which can partially explain why Apple and CEO Cook had such a strong desire to continue expanding operations in Israel with the new center in Herzeliya.
The acquisitions of Anobit and a November 2013 purchase of semiconductor manufacturer PrimeSense represent the two largest acquisitions by Apple in Israel, with each of those purchases exceeding $300 million. Since then, there have been a number of high-profile Apple incidents in Israel. The first occurred last August in the midst of Operation Protective Edge, when “Apple co-founder Steve Wozniak arrived in Israel to participate in the EduAction Forum, an annual education conference that kicks off at the start of the school year.”[6]
A few months after Wozniak’s visit, Apple opened their first official store in Israel, in the duty-free shop at Ben Gurion Airport. While this is a significant development for Apple supporters in Israel, the store is situated as a store within a store and will be staffed by only one Apple employee. That being said, it should be a stark improvement from the current Israeli market in which Apple products in Israel commonly sell for up to 60% more than their list price on Amazon.com’s U.S. site.[7]
Around the same time that Apple publicized their impending new store in Ben-Gurion Airport, they announced plans to open a local sales and marketing office in Israel. According to an Algemeiner.com article, Apple is worried by the successes of Samsung, LG, Asus, and Toshiba in the Israeli market and wants to re-price and re-market their Macbook laptops in an effort to win over Israeli consumers.[8]
Israeli tech companies have made headlines in recent years, and the world, including Apple, has certainly taken notice. Apple has made its presence felt in Israel by purchasing Israeli companies and forming R&D centers. As Apple continues to innovate and expand its product line—they’ll be coming out with an Apple Watch in the coming months and recent reports say that Apple is working on a prototype of an automobile—you can be certain that Israel will be at the forefront of Apple’s plans.
[1] http://www.timesofisrael.com/apple-ceo-tim-cook-makes-surprise-israel-visit/
[2] http://www.timesofisrael.com/apple-ceo-tim-cook-makes-surprise-israel-visit/
[3] http://www.timesofisrael.com/apples-herzliya-rd-center-now-second-largest-in-world/
[4] http://www.jpost.com/Israel-News/New-Tech/Apple-CEO-Tim-Cook-to-inaugurate-new-Israeli-headquarters-next-week-390866
[5] http://www.zdnet.com/article/tim-cook-visits-israel-to-open-new-r-d-center/
[6] http://www.jpost.com/Israel-News/New-Tech/Apple-CEO-Tim-Cook-to-inaugurate-new-Israeli-headquarters-next-week-390866
[7] http://www.timesofisrael.com/fans-hope-for-low-prices-at-new-ben-gurion-apple-mini-store/
[8] http://www.algemeiner.com/2014/10/05/apple-set-to-open-first-store-in-israel-at-ben-gurion-airport/
