Apple stakes future growth on emerging markets, starting with India
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[May 05, 2023] By
Stephen Nellis
(Reuters) - When Apple Inc surprised investors this week with a rise in
iPhone sales despite a slump in the global smartphone market, Chief
Executive Tim Cook credited emerging markets like India where the
company is luring away Android phone users.
Cook is betting that those markets will provide more opportunities for
growth, with their youthful populations and relatively few iPhones.
Apple said iPhone sales rose 1.5% to $51.3 billion for its fiscal second
quarter even as global smartphone shipments fell 13% in January to
March, according to research firm Canalys, whose data showed Apple
gained market share from Android phones.
Apple said it set sales records in several countries across South Asia,
Latin America and the Middle East.
"We're putting efforts in a number of these markets and really see,
particularly given our low share and the dynamics of the demographics, a
great opportunity for us in those markets," Cook told investors during a
conference call.
India is perhaps Apple's biggest focus. The company recently opened its
first two retail stores there, in Mumbai and Delhi, and while Apple does
not disclose revenue for the country, Cook told investors that it set a
quarterly record and percentage growth was in very strong double digits
year-over-year.
"There are a lot of people coming into the middle class, and I really
feel that India is at a tipping point, and it's great to be there," Cook
said on the conference call.
Apple was the second biggest revenue generating brand in India in 2022,
second only to Samsung as it gained 18% of the total value of smartphone
shipments, according to research firm Counterpoint.
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![](../images/050523PIX/busine46.jpg)
Apple CEO Tim Cook gestures during the
inauguration of India's first Apple retail store in Mumbai, India,
April 18, 2023. REUTERS/Francis Mascarenhas
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For Apple, selling an iPhone in an emerging market represents more
than just the sale of one device - it represents the chance to get
consumers hooked on Apple devices and services over time. Customers
who start with an iPhone might later add an Apple Watch or AirPods
or sign up for subscription services.
Cook said he saw opportunities for Apple in India in services but
said that average revenue per user - a metric known as ARPU in the
subscription business - would take time to catch up to Apple's other
markets.
USED IPHONE BOOM
Part of the reason that Apple has been able to gain market share in
both emerging and developed markets is the emergence of a booming
market for used iPhones.
Sales of refurbished iPhones rose 16% in volume globally during
2022. India led the growth with a 19% jump, according to
Counterpoint, with iPhones accounting for 11% of secondary
smartphone sales in India.
In an interview with Reuters on Thursday, Apple's Cook said little
of Apple's direct iPhone revenue comes from refurbished devices.
However he said the company has tried to bolster the used iPhone
market by offering trade-in deals on its iPhones and building them
sturdy enough to last several owners.
"We encourage the market and it provides us an opportunity to hit
some price points that we would not otherwise play in," Cook said in
the interview.
(Reporting by Stephen Nellis in San Francisco; Additional reporting
by Munsif Vengattil in New Delhi; Editing by Sonali Paul)
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