CEO Tim Cook is in India this week. He’s opened two new Apple stores, is scheduled to meet with Prime Minister Narendra Modi, and he’s seeing sights and visiting customers in the country. The international trip is the strongest sign yet that India has become a huge strategic focus for Apple as supply chains move away from China and its smartphone market is increasingly saturated with iPhone owners.
India could echo the role China has played in Apple’s business for the last 15 years: A massive market with an expanding middle class to power sales growth, and potentially a home base for the production of millions of Apple devices.
Analysts say that India’s large population and maturing economy is ideally situated for Apple to make inroads by increasing marketing efforts and offering retail in the country. At the same time, India’s government is eager to work closely with Apple to make it possible to manufacture in the country, CNBC reported.
There’s room for Apple to grow on the subcontinent: Apple has less than 5% of the smartphone market share in India, versus about 18% in China, said Angelo Zino, senior analyst at CFRA research. The bulk of smartphone sales in both countries use versions of the Android operating system created by Google.
“As you look at India today, it’s very similar to China 15 or 20 years ago,” Zino said. “It’s really that natural wealth effect over time that’s going to help Apple really penetrate and see significantly higher revenue potential in India.”
The opportunity could be massive: Apple did $74 billion in sales in China, Hong Kong, and Taiwan in fiscal 2022. That’s about 18% of Apple’s total revenue during the period.
India is not there yet. It’s reported in a category with other markets called “rest of Asia Pacific,” which reported only $29 billion in sales during the same time period.
Corporate filings in India covered by local media suggest that Apple’s sales in the country were about $4 billion in fiscal 2022, and Bloomberg reported earlier this week that Apple reported nearly $6 billion in sales in the year ending in March.
Cook has also made the India-China comparison to investors.
“We are, in essence, taking what we learned in China years ago and how we scale to China and bringing that to bear,” Cook said on an earnings call earlier this year.
Nearly all Android
India is the largest market that the iPhone hasn’t fully cracked, meaning it is critical for sales growth. Cook boasted in February that the company was successfully wooing “switchers” in the country. That’s Apple’s word for previous Android phone owners who have decided to buy their first iPhone. Cook said in February that Apple had its best sales quarter ever for iPhones in India in the quarter ending in December.
Read More at https://www.cnbc.com/2023/04/18/why-india-is-so-important-to-apple.html
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