June 24, 2024

Why Apple, Tim Cook Brief Description: Growing their Business in India

  • India’s economy is projected to surpass that of the US by 2075.
  • The boom potential has caught Apple’s eye.
  • A growing middle class and demand for advanced technology provide opportunities for Apple to increase revenue.

Apple may have hinted at its next big target: India.

The country is on pace to overtake the United States as the world’s largest economy by 2075, according to Goldman Sachs recently report. Although there are plenty of obstacles on that road, it is becoming clear that Apple believes in the transformation of India.

“I see a lot of similarities with where China was a few years ago. And so I’m very, very bullish and very optimistic about India,” Apple CEO Tim Cook told investors in 2017.

Six years later, Apple is just starting to see the results of that vision – they opened their first two stores in India earlier this year – and there are as many reasons to be as optimistic as ever.

Consider the following:

1. Only 5% of smartphones sold in India are iPhones

According to CNBC, iPhones accounted for 5.1% of all smartphone sales this year in India. As our Beatrice Nolan noted, that’s even worse compared to cheaper Android devices.

However, that gap is already starting to narrow. According to data collected by CNBC, the share is up from 3.4% just a year ago, and iPhone sales jumped 50% in that time period. India also accounts for 4% of all iPhone sales, making it the fifth largest consumer of Apple phones.

2. Apple doesn’t need to dominate the market to see huge revenue growth

Apple’s share of the Chinese smartphone market is still only 17%. However, Apple’s slice of the pie in China has almost doubled from 9% just three years ago, and Greater China will account for 19% of Apple’s revenue in 2022. Apple is not necessarily the dominant player an in-country phone for India to boost its business; just need to be in the mix.

And with India surpasses China as the world’s largest country by population this year, the room for growth is huge.

3. India is young, with a growing middle class and a growing appetite for luxury

In contrast to China with its aging population, India has a young population with a passion for consumer goods. 50% of Indians are under 25 and 65% are not yet 35. Although China still has a much larger middle class, Cook noted“A lot of people are coming into the middle class, and I really think India is at a tipping point.”

With that growing middle class comes higher demand for more expensive technology. The average selling price for a smartphone in India is up 18% this year, with “premium” smartphones now accounting for 11% of all sales, topping double digits for the first time.

4. Making more iPhones in India would be another big win

Apple is also increasing its manufacturing in India as they look to become less dependent on China. While it makes sense not to get caught up in the US-China trade war and the recent struggles in the Chinese economy, there’s an even bigger reason: it’s now cheaper to make things in India.

“Labor in China is expensive now,” Nitin Soni, senior director of Fitch Ratings told Forbes. “If you want to lower your production cost, you have to move to other countries like India.”

Apple already dominates the US and much of the rest of the world, but is still a minor player in India. However, if the Indian economy can stay on course, Apple is poised to plant a flag in the world’s largest country.

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