As China sales show signs of cooling, Apple is touting India’s appetite for iPhones, betting that rising wages and an expanding middle class will pull consumers away from the cheap alternatives that currently dominate the market. In an earnings call in which the company reported meagre iPhone growth and forecast its first revenue drop in 13 years, the Indian market stood out as a rare bright spot for Apple.
IPhone sales climbed 76 percent in India from the year-ago quarter, Apple CFO Luca Maestri said.
Apple CEO Tim Cook said the world’s third largest smartphone market presents a “very good business environment” going ahead.
Apple has been sharpening its focus on India as it sees it “quickly becoming the fastest growing BRIC (Brazil, Russia, India and China) country”.
Describing India as a rapidly expanding market, Cook said revenues from the country were up 38 per cent (48 per cent in constant currency). “So it’s a very rapidly expanding country. And I think the government in India is very interested in economic reforms and so forth that I think all speak to a really good business environment for the future,” Cook said on an investor call.
Recently, Apple applied to the Department of Industrial Policy and Promotion ( DIPP) for approval to set up retail outlets in India.
Comparing India with the Chinese market, Cook said the population of India is incredibly young.
“I think of the China age being young, at 36, 37 and so 27 (median age in India) is unbelievable. Almost half the people in India are below 25. And so I see the demographics there also being incredibly great for a consumer brand and for people who really want the best products,” he said.
According to data compiled by Counterpoint Technology Research, Apple sold an estimated 800,000 iPhones in India in the fourth-quarter, its highest ever amount but one that is a fraction of the 28 million smartphones sold during that period.
But with nearly 70 percent of smartphones selling for less than $150 in India, Apple's high-end phones remain out of reach of most consumers. The basic iPhone 6S sells at just under $700 in India, or nearly half the average annual wage.
Cook said Apple was “increasingly putting more energy” into India, citing a largely youthful population with rising disposable income as more people join the workforce.
With faster 4G coverage expanding, Apple has already asked the Indian government for a license to set up its own retail stores just as the market seems to be turning in its favour.
As in China, Apple products are a coveted status symbol in India, a market that analysts say is likely to overtake the US next year to become the world's second largest smartphone market.
First sales dip in more than a decade as super-growth era falters Apple Inc forecast its first revenue drop in 13 years and reported the slowest-ever increase in iPhone shipments as the critical Chinese market showed signs of weakening, suggesting the technology company’s period of exponential grow-th may be ending.
The slowdown comes as Wall Street analysts worry the company does not have another blockbuster product to repla-ce the iPhone. Apple does not report Watch sales, but it does not appear to have the makings of being a hit on the same level as the iPhone a year after launch.
And while the company is reportedly working on a car, what it plans to do in that area and when are still unclear. “It’s disappointing to see them miss on an already downward adjusted sales number and the fact is that with their iPhone growth slowing what was needed was a product to be excited about,” said J.J. Kina-han, chief strategist at TD Ameritrade. “Press-ure on the shares will continue without a well-defined plan to grow sales or a new product.”
But suggesting there is still room for growth, 60 percent of people who had an iPhone prior to the launch of the iPhone 6 have yet to upgrade to an iPhone 6 or 6S, Tim Cook said.
