In­dia Ap­petite Key to Cook’s Global Recipe

For first time, iPhone sales fall glob­ally but surge 56% in In­dia dur­ing Jan-Mar

The Economic Times - - Front Page -

Wri­tankar Mukherjee & Gul­veen Au­lakh

Kolkata | New Delhi: In­dia was a lone bright spot as Ap­ple re­ported its first quar­terly sales de­cline in 13 years. Chief Ex­ec­u­tive Tim Cook ex­pects things to get even bet­ter once high-speed 4G net­works gain trac­tion across the coun­try. While global iPhone sales fell for the first time, they rose 56% in In­dia in the Jan­uary-March quar­ter from the year ear­lier.

To be sure, most of these phones were the cheaper 5s rather than Ap­ple’s latest, and costlier, 6s and 6s Plus mod­els. Cook said the smart­phones sell­ing in In­dia are mostly “low end” due to the ex­ist­ing net­works and mar­ket eco­nom­ics.

“The thing that (has) held not only us back, per­haps but some oth­ers as well, is that the LTE roll­out in In­dia just re­ally be­gan this year, and so we’ll be­gin to see some re­ally good net­works com­ing on in In­dia,” Cook said at a con­fer­ence call af­ter Ap­ple’s sec­ond-quar­ter earn­ings an­nounce­ment. “That will un­leash the power and ca­pa­bil­ity of the iPhone in a way that an older net­work, a 2.5G, or even some 3G net­works, would not do.”

In­dia’s top tel­cos Bharti Air­tel, Voda­fone In­dia and Idea Cel­lu­lar are ex­tend­ing 4G net­works across the coun­try ahead of the com­mer­cial launch of such ser­vices by Re­liance Jio In­fo­comm.

The op­ti­mism on In­dia con­trasts with prospects else­where. Rev­enue in China and the Asia-Pa­cific re­gion took a hit, with Ap­ple fore­cast­ing an­other dis­ap­point­ing quar­ter.

While In­dia is the third largest smart­phone mar­ket, right now it’s where China was at about seven to 10 years back and hence of­fers great op­por­tu­nity, Cook said. China is cur­rently Ap­ple’s sec­ond-largest mar­ket af­ter the US. The com­pany is fo­cused on at­tract­ing first-time users in emerg­ing mar­kets like In­dia as sales show signs of ta­per­ing in de­vel­oped ones.

“On emerg­ing mar­kets, if you take a look at In­dia, we grew by 56%, and we’re plac­ing in­creas­ing em­pha­sis in these ar­eas, where it’s clear there will be dis­pro­por­tion­ate growth ver­sus the more de­vel­oped ar­eas,” said Cook. The Ap­ple boss said the com­pany has ac­cel­er­ated ex­pan­sion in In­dia in the last 18 months, in­clud­ing widen­ing re­tail reach to smaller shops. “I am en­cour­aged by the re­sults that we’re be­gin­ning to see there, and be­lieve there’s a lot, lot more there,” Cook said. The com­pany has also ap­plied for per­mis­sion to set up its wholly owned stores in the coun­try.

In­ci­den­tally, Ap­ple re­cently de­cided to re­store par­ity in pric­ing by re­duc­ing on­line dis­counts that had an­noyed brick-and-mor­tar stores, many of which had slashed their iPhone stock. Ap­ple’s distri­bu­tion reach in In­dia has dou­bled in past two years with four dis­trib­u­tors ver­sus two ear­lier, in­dus­try ex­ec­u­tives said.

Coun­ter­point Re­search said iPhone sales in the Jan­uary-March pe­riod in In­dia hit a record 630,000 units and the mar­ket tracker now fore­casts they will rise to 3 mil­lion in the cal­en­dar year, com­pared with just over 2 mil­lion in 2015.

“How­ever, most of the growth was driven by the iPhone 5s, which con­trib­uted to al­most half of the to­tal sales,” said Tarun Pathak, se­nior an­a­lyst at Coun­ter­point Re­search. “Be­ing a price-con­scious mar­ket, Ap­ple’s pri­or­ity in In­dia is to sell more iPhones and not nec­es­sar­ily new iPhones. As a re­sult, its over­all av­er­age sale price de­clined year-on-year.”

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