Daily Management Review

Apple Reports A Record Quarter In India; Analysts Believe Cook Expects The Market To Be Larger Than China


Apple made a record amount of money in India in the first quarter of the year, according to CEO Tim Cook, who emphasised the potential of what might become a crucial market for the tech giant in terms of iPhone sales and production.
During Apple's earnings call on Thursday, Cook stated that the company's India business established a "quarterly record" and witnessed "very strong, double-digit year-over-year" growth.
Apple does not release sales data for India. Apple reported total revenue of $94.84 billion in its fiscal second quarter.
Deepwater Asset Management managing partner Gene Munster told CNBC on Thursday that India accounts for slightly under 3% of Apple's overall revenue.
Investors have been focusing on Apple's potential in India since the tech giant recently expanded its presence in the nation by opening its first physical stores last month.
Low-cost Android phones, such as those sold by Samsung and Chinese competitors such as Oppo and Xiaomi, dominate the Indian smartphone market. However, the middle class is expanding, and consumers are willing to pay more on pricey equipment. According to Counterpoint Research, smartphones priced above $400 currently account for 10% of total handset volumes supplied, up from 4% before to the epidemic. This smartphone segment accounts for 35% of overall smartphone market revenue.
Cook remarked of the India market's possibilities, "There are a lot of people coming into the middle class, and I really feel that India is at a tipping point, and it's great to be there."
China has become one of Apple's most important markets, and the company's iPhones have proven popular among Chinese consumers. Given that India's population is on track to surpass China's and that many of the dynamics, such as a burgeoning middle class, are in play, Apple is optimistic about its prospects.
Apple's Greater China business, which covers the mainland, Taiwan, and Hong Kong, reported $17.81 billion in sales in the first quarter of the year, a decrease from the same period the previous year.
According to Munster of Deepwater Asset Management, Apple CEO Cook is "laying the groundwork for India to be as big as or bigger than China."
“So all of your concerns, my concerns about China, at least on the demand side, they’re having a lot of success … in India. That’s a big deal because ... you got to find large markets to go after, and after a decade they’re finally making traction in India.”
Munster was referring to Apple's concerns about a downturn in China.
Some still mistrust Apple's ability to capitalise on the Indian market. Richard Windsor, founder of the independent research group Radio Free Mobile, pointed to a discrepancy in GDP per capita between the two countries, a number that is frequently used as a broad gauge of ordinary living conditions. According to the World Bank, China's GDP per capita is more than five times that of India.
“So while potentially lots of Indians would like to buy the iPhone, in terms of total numbers, in terms of the numbers that can actually afford it in India, it is probably going to be an awful lot less than China,” Windsor said.
However, Apple's plan in India goes beyond simply selling products. In order to lessen its dependency on China, the business is also turning to India to become a key manufacturing hub.
Apple began manufacturing its flagship iPhone 14 in India last year, marking the first time the firm has built its latest handset in the country so soon to its first release. Piyush Goyal, India's commerce and industry minister, stated in January that Apple intends to manufacture 25% of all iPhones in India.