Tim Cook, Apple’s chief executive officer (CEO), greets the media with folded hands outside an Apple store at Jio World Drive mall, Mumbai, India, April 18, 2023.
Ashish Vaisnav | Sopa Images | Light Rocket | Getty’s paintings
Apple CEO Tim Cook is in India this week. He opened two recent Apple stores, is scheduled to meet Prime Minister Narendra Modi, tours historic sites and visits customers within the country.
The international trip is the strongest evidence yet that India has turn out to be a strategic goal for Apple as supply chains move away from China and the smartphone market there is increasingly saturated with iPhone owners.
India could replicate the role China has played in Apple’s business for the past 15 years: an enormous market with a burgeoning middle class driving sales growth and potentially a house base for producing hundreds of thousands of Apple devices.
Analysts say India’s large population and maturing economy are ideal conditions for Apple to invade by increasing its marketing efforts and offering retail within the country. At the identical time, the Indian government is willing to work closely with Apple to enable manufacturing within the country, CNBC reports.
Apple has room for growth within the subcontinent: Apple has lower than 5% of the smartphone market share in India, compared to around 18% in China, said Angelo Zino, senior analyst at CFRA Research. Nearly all of smartphone sales in each countries use versions of the Android operating system created by Google.
“Whenever you take a look at India today, it’s extremely similar to China 15 or 20 years ago,” Zino said. “It’s really this natural wealth effect over time that may help Apple really penetrate and see much higher revenue potential in India.”
The chance could possibly be huge: Apple achieved $74 billion in sales in China, Hong Kong and Taiwan in fiscal yr 2022. That is about 18% of Apple’s total revenue during that period.
India is not there yet. It is reported in a category with other markets called “remainder of the Asia-Pacific region”, which had just $29 billion in sales over the identical period.
Corporate documents in India reported by local media suggest Apple’s sales within the country were around $4 billion in fiscal 2022, with Bloomberg reporting earlier this week that Apple reported nearly $6 billion in sales for the yr ending in March.
Cook also made a comparison between India and China for investors.
“We’re principally taking what we learned in China years ago and the way we’re scaling up to China, and we’re using that,” Cook said during a salary talk earlier this yr.
Just about all Android
India is the biggest market that the iPhone has not fully mastered, meaning it is critical to sales growth.
Cook boasted in February that the corporate was successfully soliciting “switches” within the country. This is Apple’s word for previous Android phone owners who decided to buy their first iPhone. Cook said in February that Apple had the very best iPhone sales quarter in India within the quarter ending December.
A lady poses for a photograph near a screen displaying Apple tablets in a post-launch store at Jio World Drive mall, Mumbai, India, April 18, 2023.
Ashish Vaisnav | SOPA images | Light Rocket | Getty’s paintings
Indians who buy iPhones are far more likely to “switch” than customers elsewhere, as Android dominates the Indian market, led by Samsung and a number of Chinese brands. Android had over 95% market share within the country, according to Statcounter.
The foremost reason is the worth. Most phones sold in India are priced below even the most affordable recent Apple iPhone. Industry analyst IDC estimated in February that the common selling price of a smartphone in India is $224, up 18% in 2022. Apple’s entry-level phone, the iPhone SE, costs $429 within the US.
A method Apple could fill this gap is by allowing customers to pay for his or her phones in installments or giving them a reduction for replacing an older device. Cook mentioned these strategies when asked about India in February.
“Much has been done on financing and trade-in options to make products cheaper and provides people more options to buy,” Cook said.
Two physical Apple stores opening this week and an internet Apple store that may launch within the country in 2020 are also expected to boost sales.
‘Made in India’
The second a part of the strategy is constructing Apple’s products in-country, an enormous project that requires not only Apple’s attention but in addition efforts from manufacturing partners and native and national governments.
Just about all iPhones are actually assembled in China, which has caused some problems over the past five years, starting with trade tensions and possible tariffs through the Trump administration and increasing to recent supply chain disruptions attributable to Covid and China’s Covid policy, which led to sales shortages.
India could possibly be the large winner as Apple looks for manufacturing options outside of China. In January, India’s commerce minister told CNBC that Apple produces its latest iPhone 14 within the country and goals to produce as much as 25% of all iPhones within the country.
Apple’s foremost manufacturing partner Foxconn, which oversees much of the assembly of latest iPhones in China, is also expanding in India, reportedly constructing a $700 million iPhone parts factory in Bangalore.
As with China, the Indian government is keen to embrace Apple and use it as an emblem to attract other high-tech corporations to the country for manufacturing and development. Over the past 20 years, Chinese governments have done this on many levels worked to enable the development of big factories, resembling the Foxconn factory in Zhengzhou – generally known as “iPhone City”.
Modi wants to discuss Apple’s plans to manufacture nationwide and create manufacturing jobs, CNBC’s Seema Mody reported. He also wants to know in regards to the challenges Apple has faced in growing its user base within the country.
Not so fast
This is not the primary time investors have been enthusiastic about Apple’s potential in India, with some analysts warning that it could be some time before it becomes an enormous market.
“I told investors: all of the hype you are hearing about India this week is great,” Zino said. “I mean we predict it’s an enormous opportunity over the following decade, but don’t expect things to change overnight.”
Apple also encountered challenges during its early manufacturing experiments within the country, most notably on the Wistron factory in Bengalar where older iPhone models were assembled that a staff’ revolt broke out at the tip of 2020.
Tim Cook, Apple’s chief executive officer (CEO), reacts as a person shows him an Apple Macintosh computer outside an Apple store at Jio World Drive mall, Mumbai, India, April 18, 2023.
Ashish Vaisnav | Sopa Images | Light Rocket | Getty’s paintings
Apple has had its eye on expansion in India since at the very least 2016 when Cook I met Modi before.
At this meeting, Cook told Modi in regards to the potential for manufacturing and retailing Apple products within the country. Now, six years later, Cook is returning to India to open the corporate’s first two retail stores.
Apple was also optimistic about India back then: “India will likely be essentially the most populous country on the planet in 2022,” Cook told CNBC’s Jim Cramer, saying it had “huge market potential.”
Apple’s long-term strategy in India is best summed up in a quote Cook provided to local media during his 2016 trip to the subcontinent.
“We’re putting quite a lot of energy in here and we’re not here for 1 / 4, two quarters, next quarter, next yr or next yr, we’re here for a thousand years,” Cook said. he said.