Once not even under the radar, India has become one of the major markets for Apple Inc. (NASDAQ:AAPL). According to the latest filing with India’s Registrar of Companies (RoC) this week, Apple has achieved $1 billion sales mark from its Indian operations for the first time. The company registered an impressive growth of 44% in sales during the most recent financial year, ended on September 30 2015. The sales has been doubled in the last two years, largely due to the increased demand for the iPhones.
This is an important feat for Apple as, after the US and China, India has become the third biggest market for mobile, smartphone and the internet. India, however, never been a focused market for Apple till the regime of its visionary CEO Steve Jobs. It was only after Tim Cook took the charge after the sudden demise of Steve Jobs, India has had received attention as one of the promising markets. In the last two years, almost every iPhone is introduced in India within a few weeks after its global launch.
Visualizing India as a land of opportunity, in September 2012, Tim Cook decided to up the ante against the Android smartphone OEMs currently rule the Indian market. The company increased its advertising budget and launched first TVC and many other campaigns to market its latest iPhone. Consequently, Apple’s market share soared to 9%, to become the third largest smartphone manufacturer in India.
India: The Future of Apple iPhone
iPhone is the driver of Apple’s growth. Since the Q1, 2013, overall iPhone sales has been accounted for more than 50% of the company’s total revenue. The share of iPhone has increased to 64% during the latest financial year. This clearly indicates that for Apple how important iPhone sales is.
The smartphone market in the US has saturated as the population penetration has crossed 100%. From the last few quarters, the sales of Apple iPhone has started slowing down in the country and Apple is losing its smartphone grounds to its arch rival Android. The iPhone sales share had declined to 29.2% in the third quarter of 2015, from 32.6% during the same period last year.
In 2011, China surpassed the US to become the world’s largest smartphone market. This got the eyeballs of many global smartphone manufacturers and everyone, including Apple, joined the race to grab a sizable chunk of the pie. After four years of maturation, the market has started slowing down. There are more than 1.3 billion mobile phone subscribers and nearly 930 million of those are on a smartphone. In 2014 and 2015, though, Apple had received a commendable growth in the market owing to the obsession of having an iPhone among the youngsters but with the advent of new smartphone players likes of Xiaomi and Huawei, the iPhone maker has started feeling the heat.
The scenario of the Indian smartphone market is quite different than the US and China. The country is a home of 1.3 billion people and the number of mobile phone subscriptions has reached 930 million. But when we dig deeper, we learn only 20% of mobile phone users are actively using a smartphone. This clearly portrays a big window of opportunity for all smartphone OEMs, including Apple as more than 1 billion people are yet to buy a smartphone. No wonder, Apple has decided to open its first retail outlet in India and initiated a dialog over the possibility of shifting the iPhone manufacturing in India with the help of Foxconn.
Despite, India is going to be a tough market for Apple owing to the high price of iPhones and the fact that India is a price sensitive market. To relax the onboarding process for prospective buyers Apple has tied up with many financial institutions to offer the iPhone at easy interest-free EMIs. To boost the sales of iPhone in India, the company has tied up with 130 corporate resellers across the country, and the number is expected to grow to 200 by the end of 2016.
Still, it’s quite unlikely that India is going to be a major market for Apple iPhones. The declining ASP (Average Selling Price) of smartphones and cut-throat competition among smartphone manufacturer – thanks for Xiaomi, OnePlus, Huawei – is already making giants like Samsung and LG sweat like never before. Apple iPhone may not be able to grab a big chunk of the smartphone market in India, but the lust and love of holding an iPhone are not going to die anytime soon – no matter it comes at what price. Even if Apple manages to reach a double-digit smartphone market share figure in India, apparently, the company will have more profit dollars in banks than those who sell millions of devices but at a thin margin.