Mumbai Capital

Apple’s next big bet: India

riven by its young population, India is a great long-term market, said its Chief Executive Tim Cook during a conference call with analysts on Tuesday. The firm is putting more energy into the country, Cook said following its earnings announcement.

“Almost half the people in India are (aged) about 25. So I see the sort of demographics there incredibly great for a consumer brand for people that really want the best products,” he said.

Cook’s comments come at a time when the world’s most valuable company by market capitalisation has filed an application with the Indian government to set up its retail outlets. The firm has also forecast a first revenue drop in 13 years for the January-March quarter, amid a slowdown in key markets such as China, Brazil, and Russia.

Pointing out that the company always invests in a downturn, Mr Cook said Apple continues to invest in markets which it believes are great in the long term. India, for example. He said the firm is still bullish on China, and that he doesn’t subscribe to the “doom-and-gloom predictions.”

Sales of the company’s flagship iPhone climbed 76 per cent in India from the year-ago quarter, Apple Chief Financial Officer Luca Maestri said in the conference call. According to research firm Counterpoint Technology Market Research, Apple’s shipments in the fourth quarter (July-September) of 2015 was 0.8 million in India, its best ever. The firm had shipped close to half a million units in the year-ago period, it added.

Cook said the firm’s revenue from India grew 38 per cent in the first quarter (October-December 2015). “We also had currency issues in India, as everybody else did. Our constant currency growth was 48 per cent.” He said he was bullish on India’s growth story and its demographics.

“India’s growth is very good. It is quickly becoming the fastest growing BRIC country. It is the third biggest smart phone market in the world behind China and the US. The population in India is incredibly young. The median age there is 27. I think of China, being young is 36-37; 27 is unbelievable,” Cook said.

He said the Indian government is keen on economic reforms, and he sees a really good business environment for the future. Apple’s buoyancy on the Indian market comes at a time when telecoms majors such as Airtel and Vodafone have flagged off their 4G services, and Reliance Jio is expected to unveil its service soon.

“India is now one of the high potential markets in APAC region beyond China for Apple, not only in terms of volume but also the massive scale and opportunity lies ahead,” Tarun Pathak, senior analyst at Counterpoint Technology Market Research said. “Growth of LTE (Long Term Evolution, a high-speed data protocol) services, increasing base of smartphones and young affluent consumers flocking to enter Apple ecosystem are some of indicators for growth of Apple in India. Apple continues to be an aspirational brand in India and high stickiness of its ecosystem ensures that that installed base of iPhone users in India is going to be more robust than ever.”

In India, Apple has to fight in a price conscious market; close to 70 per cent of the smartphones sell for less than $150 (approximately Rs 10,000). According to research firm Canalys, in shipments above $500, Apple has been growing steadily in the premium segment in India. Apple’s market share for smart phones in the premium segment has moved up from 16 per cent in Q3 2014 to almost 30 per cent in Q3 2015.

“Affordability is a relative term, and Apple has managed to prove that in China,” Rushabh Doshi, an analyst at Canalys said.

Mr Pathak added, “India is a price-conscious market. Apple can’t ignore that. In such a scenario, Apple, in emerging markets, is replicating its earlier strategy to position its earlier flagships (such as iPhone 4S) as affordable, through aggressive price cuts and availability through various channels including online. The recent price cut of iPhone 5S saw a healthy uptake like never before. Therefore, Apple’s strategy in a price conscious market such as India is to sell more iPhones, and not necessarily new iPhones.”

Canalys’s Doshi said the potential for Apple in India is with targeting consumers, who are looking at their second or even third upgrade, and are looking for a different, if not better, experience with their smartphone. “Apple’s short term outlook in India will not be spectacular, as it sees growth in pockets,” he said.

“However, in the long term, as the market matures and the general affordability increases, Apple is staring at a China-like scenario, where users will gravitate towards quality, user experience, and services like Apple Music or Apple Pay.”

‘Apple continues

to invest in markets which it believes

are great in

the long term’

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Printable version | Jun 23, 2021 7:16:38 AM |

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