Apple’s bet on the online store and better-priced products in India finally seems to be paying off.
The American tech giant has doubled its business in the last quarter of 2020 in the world’s second-most populous country, the company said in its earnings call earlier this week. Apple clocked a record global revenue of USD 111.4 billion in the quarter.
“We doubled our business (in India) last quarter compared to the year-ago quarter,” said Tim Cook, chief executive officer at Apple during the call.
While the company did not share any India-specific numbers, it sold over 1.5 million devices in the South Asian nation between October and December 2020, as per the data collated by Counterpoint Research, which tracks smartphone shipments. The Hong-Kong based firm said Apple witnessed 171% year-on-year growth in the fourth quarter of 2020, doubling its market share to 4% in the country.
Prabhu Ram, head- Industry Intelligence Group, at CyberMedia Research (CMR), in a note, said it is the popular iPhone SE 2020, iPhone 11, and iPhone XR together that accounted for over 60% of iPhone shipments in Q4 2020, driven by aggressive and attractive offers during the festive season.
“We are doing a number of things in the area. We put the online store there, for example, and last quarter was the first full quarter of the online store,” Cook said. “And that has gotten a great reaction to it and has helped us achieve the results that we got to last quarter.”
The Cupertino-headquartered company opened its online store in September 2020, a year after first announcing its plans. The move was in line with its three-prong strategy that the tech giant kicked off in late 2019 after a depressing year that saw its sales and revenues nosedive in India. It entailed Apple stepping up its investments in the country to expand its retail footprints and manufacturing base and sharpening its focus on better-priced products such as iPhone XR.
In August 2019, the company had committed to invest INR 1,000 crore (USD 137 million) for opening an online store and three of its iconic retail stores. However, in January 2020, the smartphone giant decided to postpone the launch of its much-awaited online store in the country. Instead of the scheduled launch during the first quarter of this year, the company said its digital platform would go live in August-September as it anticipated high demand due to the upcoming festive season.
While it wasn’t wrong in its projections, what helped the company tremendously was the mass shift in the country toward buying things online including high-ticket items due to the pandemic which forced people to remain indoors.
As for its offline retail stores, the company plans to open them this year, which it expects would help it expand its base in India, where its market share is still substantially low in absolute terms.
According to Cook, despite the good growth trajectory, Apple’s “absolute level of business” in India is still “quite low relative to the size of the opportunity.”
“We’re also going in there with retail stores in the future. And so we look for that to be another great initiative and we continue to develop the channel as well,” he added.
India as a manufacturing hub
Apple has also been trying to make India its new manufacturing hub amidst the on-going tension between the US and China. The company first began assembling low-cost iPhones in the country in 2019 and ramped up the production last year after the two-month-long pandemic-induced lockdown was lifted in June.
In August, local media Times of India reported a contract manufacturer for Apple was shifting six production lines to India to de-risk manufacturing bases by diversifying supply chains. The vendor also had plans of exporting around USD 5 billion worth of iPhones from the country.
A month later, it was reported that the company’s top contract manufacturers including Taiwanese giants Foxconn, Wistron, and Pegatron were planning to invest a total of about USD 900 million in India over the next five years. Setting up large scale manufacturing operations in India is also helping Apple bring down the price of its devices in the country.
As such, the company started slashing prices of its older devices including iPhone XR in 2019 to bring its growth in the country back on track. It also launched iPhone 11 and iPhone SE 2020 at reasonable prices hoping it would help boost sales.
“In 2020, Apple enjoyed a stellar, breakthrough year in the India market, on the back of the enduring aspirational appeal of iPhones,” said Ram. “Apple is on track to grow further and gain strength in the year ahead as it unveils its new India initiatives on the back of its new online store and upcoming flagship retail stores.”
