Apple In India: This Could Be A Huge Opportunity
India has been a below-the-radar market for Apple. Yet, the story has been changing slowly.
Research firm Canalys has released its third quarter smartphone shipment report for the India market. According to it, “Apple regained momentum in India in Q3, with double-digit growth to nearly 800,000 units.” For reference, the whole smartphone market grew by a tamer but still respectable 8%.
Expect numbers to improve
Worth noting, the numbers above do not fully reflect a couple of recent developments that I believe are favorable to Apple.
First, the Cupertino company opened its online store in India very late in the third quarter. Now, consumers in the country do not have to rely on third-party channels to buy Apple products.
Instead, they will be able to use financing options and trade-in programs directly from the device maker, and students will have access to discounted pricing on certain devices and services.
Second, the iPhone 12 lineup was announced only in October. To be fair, as Canalys itself admits, “the new iPhone 12 family will be a tough sell in India this year, as network operators do not yet have the infrastructure for mass market 5G deployment.”
Still, there may have been some pent-up demand in the third quarter, as consumers awaited the release of the new model. I expect smartphone sales growth in India to be even better for Apple in the fourth quarter.
Let’s do some math
As a reminder, Apple is a very small player in India. Check out the graph below. The Cupertino company currently holds a tiny slice of the market: 1.6%
Still, growing from a small base can make a significant difference. Think again about the number of iPhone shipments in the third quarter in India, according to Canalys: 800,000. Also consider that this period of the year tends to be the slowest in sales, with the upcoming holiday months being the best.
Now, let’s hypothesize that the average selling price of the iPhone was $400, which is the entry level price of the entry level iPhone SE with the least storage capacity. Once again, this is just a high-level math exercise, and this number could be higher. Using these assumptions, Apple’s sales in India would have reached $320 million in the third quarter of 2020.
Now, assume that Apple is successful at becoming a larger player in India, and doubles its market share by this time next year – whether this is a reasonable assumption remains open for debate. This could represent revenue growth of $300 million to $400 million, depending on the growth of the smartphone market in general.
In this case, iPhone sales in India alone would have accounted for one-third of total company sales growth in the third calendar quarter of last year. In other words: instead of growing 1.8%, as they did in 3Q of 2019, Apple‘s revenues could increase by 2.4% with more of a “boost” from India.
And don’t forget, we are only talking iPhones here. Additional sales of other devices and accessories could support financial results even further.
I believe that India will become a major market for Apple. For now, it looks like the Cupertino company has been making the right moves to take advantage of the opportunities, and the results are slowly starting to show.
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