Key Points ? Fast-growing sales of Apple products in heavily populated India bode well for the tech giants future. ? Indias per capita GDP is projected to rise 58% over the next five years and boost Apples addressable market there. ? Apple is shoring up production and sales capabilities in India to set itself up for long-term growth. India is the second-most-populous country in the world, counting nearly 1.34 billion people as citizens, trailing Chinas population of almost 1.4 billion by a small margin. Not surprisingly, global companies are competing hard for a portion of Indias substantial private consumption expiture pie, which was reportedly worth more than $460 billion in March this year, according to database provider CEIC.
Apple (NASDAQ:AAPL) is one of the many companies that have been trying to crack the Indian market for a long time now, albeit with mixed results. The iPhone is still a bit player in the booming Indian smartphone space despite being in the country for many years. Apple reportedly held just 4% of Indias smartphone market in the fourth quarter of 2020.
However, there are signs that Apples fortunes in India are changing thanks to a series of smart steps, as well as the huge opportunities afforded by the upwardly mobile population thats getting exposure to new technologies. Indias massive population presents a huge revenue opportunity for Apple across various device categories, and the good part is that the company is already on track to take advantage of it.
Apple is climbing the ladder in India
DigiTimes reports (via 9to5Mac) that sales of the Mac more than tripled in India in the first quarter of 2021, making Apple the fifth-largest PC original equipment manufacturer (OEM) in the country. IDC estimates that Apples PC shipments (excluding ts) shot up 335% year over year during the quarter, falling just behind Asus by 2,000 units.
Apples impressive performance in Indias PC market isnt surprising, as the company has witnessed a nice bump in revenue and shipments in the wake of the novel coronavirus pandemic. Whats more, Apples iPad sales in the country are taking off despite the broader t market being in a slump. According to third-party estimates, Apples iPad shipments in India increased 144% year over year in Q1. The company is now the second-largest t brand in the country, with a 29% market share.
Meanwhile, Apples iPhone sales in India are also taking off, with a 207% jump in shipments in Q1, according to Counterpoint Research. For comparison, overall smartphone sales in India had increased just 23% year over year during the quarter.
Technology market analysis firm Canalys points out that the launch of the online Apple store in India in September last year has triggered its impressive sales growth. Thats not surprising, as Apple is offering trade-ins, discounts, and no-cost equated monthly installments (EMIs) through its online store, which seems to be bringing more consumers into its fold. Additionally, discounts offered by e-commerce platforms on popular Apple products are also driving sales.
More importantly, Apple is taking steps to ensure that it sustains its terrific momentum in India.
Pulling the right strings to ensure long-term growth
Encouraged by the sales growth spurred by its online store, Apple is now working toward ing physical stores in India. CEO Tim Cook had said in January this year that the company has plans to launch physical stores in India, and it will continue to expand that network over the long run. Sources cited by the Indian daily newspaper Business Standard suggest that Apple may be planning to physical stores in the three metro cities of Mumbai, Bengaluru, and Delhi.
Additionally, Apple resellers are looking to expand their physical footprint, including smaller cities and towns. These efforts to bolster Apples sales footprint in India will be complemented by the companys improving manufacturing operations in the country. Apples manufacturing partners, Foxconn and Wistron, have been chosen as a part of a $1 billion incentive plan that aims to increase domestic manufacturing. Apple is reportedly going to use the incentive to make iPads in the country. This could bring down the price of its highly popular t, as manufacturers under this plan are to get cash back for goods manufactured locally over a four-year period.
Throw in the fact that Indias gross domestic product (GDP) per capita is expected to increase more than 58% by 2026 from 2020 levels, it becomes easier to see why Apples addressable market in the country is likely to keep growing. Apples products are in hot demand in the preowned market thanks to lower prices: The iPhone has a 20% market share in the used smartphone market in India. So a higher disposable income and local manufacturing could translate into strong sales growth of Apples new products in the long run considering the companys solid brand equity. India is still a ridiculously small portion of Apples overall business. The company generated just $1.85 billion in revenue there in fiscal 2020. But Indias population of 1.34 billion people and their increased sping power could a new growth frontier for Apple, which the company is doing well to tap with a set of smart moves that could help it remain a top tech player into the future.
