Iphone and India are in news lately as the smartphone maker opened its first official store in the soon-to-be most populous country of the world.
The internet is full of picutres and videos of the opening where we can see fans of Iphone queued outside the 20,000 square-foot store and Tim Cook, the CEO of Apple, also making the appearance.
Source: CNET
Source: BBC.com
Source: @tim_cook
Behind the bling
While this is indeed a great achievement for India there are some important factors that we need to consider in order to completely understand this latest development.
First of all, the share of Apple in India’s phone market until December 2022 was only 3.54 percent. Ever since, the company has managed to add a tad more to its customer base in India making the total share by August 2022 around 4.15 percent.
Source: Statista.com
India has a total market of 600 million mobile users. However, given its 1.4 bn people this represents a great market opporuntunity.
Source: Bloomberg
A very important factor that hinders the ability of people in India to purchase Iphone is, of course, the cost. Most users of Apple in India belong to upper-middle class and upper-class. The company has captured 65 percent of premium markets for smartphones.
India ranks as the lowest in terms of per capita income among the 26 countries that have an Apple store. Average price of a smartphone in India is $224 whereas that of an Iphone is $429.
Source: Moneycontrol
Moreover, 95 of users there are of Android.
Source: Statecounter
Recent statistics regarding India’s smartphone market are also not very promising. As per the latest data from International Data Cooperation’s (IDC) Worldwide Quarterly Mobile Phone Tracker India registered 144 million shipments in 2022 which was lowest since 2019 and a 10 percent YoY decline. However, this might be due to the global economic slowdown as India is also facing high levels of inflation.
It is also important to take a moment and briefly explore the relation between China and Apple. China makes around 90 percent of the Iphones made globally while share of India is 6 percent. However, Apple’s strategy to deepen its roots in India are based on long term planning. See the snapshot of an article that I also recommend the reader to read. For context: Apple sales in China, Hong Kong and Taiwan were $74 bn in 2022, 18 percent of its total sales. India falls under the category of “rest of Asia Pacific” with $29 bn sales. But this could change as India has overtaken UK as the 5th largest economy of the world.
Source: CNBC - Why India Is So Important To Apple
India has a long way to go in terms of becoming equally important to Apple as China is.
Iphone City -Zhengzhou in central China's Henan province
Source: CNN
Read this detailed and mesmerizing piece on Iphone City in China where half of world’s Iphone’s are produced.
Link: https://www.businessinsider.com/apple-iphone-factory-foxconn-china-photos-tour-2018-5#workers-on-the-day-shift-begin-streaming-in-through-the-factorys-gates-around-7-am-those-who-can-afford-it-ride-motor-scooters-but-most-walk-from-the-nearby-dorms-or-take-a-bus-if-they-live-in-the-buildings-farther-away-5
Here are some interesting charts that give more perspective vis a viz India and China in terms of its market potential.
Source: Brookings
By 2030, India and China are projected to bring in more than 500 million new consumers, accounting for 55 percent of the global total. This will also contribute to an estimated $9 trillion in annual spending, which makes up 42 percent of the global total, with India and China each playing a significant role. India's consumer class is characterized by a young population spread across various regions, indicating significant potential for growth in consumer spending. On the other hand, China's consumer class is comparatively older, wealthier, and largely concentrated in urban areas.
This provides for a good segue into the wider topic explored by Dr. Parag Khanna in his book, Future is Asia. We will try to explore this dimension in the next article.
Happy Reading!