Apple CEO Tim Cook sees India at a ‘tipping point’ as China pivot quickens

Apple CEO Tim Cook sees India at ‘Tipping Point’ as China pivot quickens

Apple CEO Tim Cook said on May 4 that the Indian market is at a "tipping point" since there are a lot of people coming into the middle class, highlighting the country's rising importance for the iPhone maker.

During the company's earnings conference call, Cook reiterated that India is an "incredibly exciting market" and a "major focus" for Apple.

"Looking at the business in India, we did set a quarterly record and grew very strong double digits year over year, so it was quite a good quarter for us," Cook said.

These comments come on the back of Apple's significant retail expansion in the country in the past month. Cook visited India in April 2023 after nearly seven years to launch two retail outlets, one in Mumbai and another in Delhi.

During his India trip, Cook also met Prime Minister Narendra Modi, IT minister Ashwini Vaishnaw, and junior IT minister Rajeev Chandrasekhar, affirming the tech giant's investment commitments to the world's second largest smartphone market.

Apple is betting on India to become a key manufacturing hub in order to diversify its manufacturing capabilities beyond China, thanks in part to incentives provided by the government through its production-linked incentive (PLI) scheme for smartphones.

The firm clocked iPhone exports of about $5 billion-$5.5 billion from India in FY23, accounting for nearly half of the country's mobile phone exports, according to estimates from industry sources.

Read: Apple BKC store opens in Mumbai, signaling the iPhone maker's growing India ambitions

Apple also continues to lead India's premium smartphone market (above Rs 30,000) in Q1 2023 with a 36 percent market share, according to the market research firm Counterpoint Research. It clocked record shipments of over 6.5 million in 2022, registering a 16 percent growth YoY, the firm noted.

The company's overall market share in the country's smartphone market is still modest, at an estimated 6 percent.

Apple has clocked record revenue growth in terms of iPhone sales in India in recent quarters.

Benefiting from the growing premiumisation trend among Indian consumers, Apple has clocked record revenue growth in terms of iPhone sales in India in recent quarters. Apple's India sales have reportedly jumped to nearly $6 billion in FY23 from $4 billion in FY22.

"Overall, I couldn't be more delighted and excited by the enthusiasm I'm seeing for the brand there. I was just there, and the dynamism in the market, the vibrancy is unbelievable" Cook said.

During the call, Apple CFO Luca Maestri said that iPhone sales set a March quarter record of $51.3 billion revenue, due to strong performance in emerging markets such as India, Indonesia, Turkey and the UAE, with revenue doubling in these markets on a year-over-year basis.

In response to an analyst query that drew comparison between India today and China about a decade ago, Cook said that "each country is different and has their own journey".

"What I do see in India is a lot of people entering the middle class, and I'm hopeful that we can convince some number of them to buy an iPhone," he said.

Cook mentioned that they also see opportunities across the board in the country, including its burgeoning services business.

"Obviously, the ARPUs are lower in India than other regions for whether you're talking about TV and movie streaming. But if you look at it over a long arc of time, I think there's a good opportunity across the board" he said.

Apple currently offers its music streaming, video streaming and its video game subscription service at competitive prices to Indian consumers, although a range of services including Apple's mobile payment service Apple Pay or other services such as News+ and Fitness+ are yet to make their way into the country.

Globally, Apple has over 975 million paid subscriptions across various services on its platform, Cook said during the call.

Overall, the company posted its second straight quarter of revenue decline on a yearly basis. For the quarter ended April 1, 2023, Apple's revenue dipped 3 percent year-on-year to $94.8 billion.

“Our year-over-year business performance improved compared to the December quarter, and we generated strong operating cash flow of $28.6 billion while returning over $23 billion to shareholders during the quarter,” Maestri said.