It has been a memorable last couple of years for Apple in India. The company opened its first two retail stores in Mumbai and New Delhi, respectively. There’s a growing demand for iPhones, and India can’t seem to have enough of them. According to Counterpoint Research, Apple took the top spot in the Indian smartphone market in terms of revenue.
Tarun Pathak, research director, Counterpoint Research attributes this growth to multiple factors. “India’s young population wants aspirational products and the iPhone is on top of that list,” Pathak told Moneycontrol. “Apple is riding on the ‘premiumisation’ trend where smartphone users are maturing and looking to buy their third or fourth smartphone, which is these days a premium flagship phone,” Pathak said. This is where the iPhone comes in.
CounterPoint Research estimates that in the next two years, India will emerge as the third-largest market for iPhones in the world. The US is the biggest market as of now and that’s unlikely to change. Currently, India ranks fifth behind US, China, Japan and the UK. CounterPoint Research estimates that in 2024 India will surpass the UK and by 2026, it will also edge out Japan .
In November 2023, Apple CEO Tim Cook, during an investors’ call, revealed that Apple had grown in “very strong double digits” in India. Cook called India a major focus for Apple. Apple’s market share still remains low, and Cook acknowledged. “We have a low share in a large market, and so it would seem that there’s a lot of headroom there [in India],” he said during a call with investors after Apple’s quarterly earnings report in November.
Shift in strategy
Apple’s strategy, according to Pathak, has certainly helped. There has been an increased focus on assembling iPhones in India. Apple got it distribution strategy spot on, says Pathak. In the past, Apple mainly sold iPhones in wealthier, more developed markets (Tier-I and Tier-II) through premium resellers and distributors. This is because most of the demand (over 65-70%) came from these regions.
However, according to Counterpoint Research, Apple changed its distribution strategy in 2019. Amazon and Flipkart became a bigger focus, and in addition to that, the likes of Croma and Reliance Digital expanded Apple’s offline reach. The company made its products more attainable by offering financing options like no-cost EMI, further boosting sales. “Depending upon quarter, the online vs offline channel contribution to Apple's sales changes. In peak holiday season, due to heavy promotions form online channels, we see greater proportion of sales coming from those platforms whereas in non-peak season offline contribution relatively increases,” Pathak explains.
Pathak said that the Apple brand name is a big pull, but so is the promise of its device ecosystem. Another aspect of Apple’s growth could be its Services business. Counterpoint Research expects Apple’s services revenue to cross the $100-billion mark by 2025. Pathak, however, believes that iPhones will continue to be the centrepiece for Apple in India. “It might change as the demand for other Apple products increases, but in the next couple of years, the iPhone will be the driving force. More and more Indians want the iPhone and are happy to buy the older models as well, and that has further helped Apple grow in India,” Pathak added.
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