Apple revealed its second quarter results on Tuesday and for the first time since 2003, revenue has dropped for the company as iPhone sales slowed down. Apple’s revenue stood at $50.6 billion and decline 9 per cent.
While iPhone sales have slowed down in China and the more developed markets, India it seems was bright spot with over 56 per cent increase in sales of the iPhone. Apple CEO Tim Cook in the investor earnings call also revealed the tech giant from Cupertino expects India to grow significantly as a smartphone market.
Here’s a quick look at the top five statements that Tim Cook made with regard to India:
India sales grew 56 per cent
“India for us grew 56 per cent, and yes we are placing emphasis in these areas (emerging markets) where its clear, there will be disproportionate growth versus the more developed areas,” said the Apple CEO in the earnings call.
This 56 per cent growth is big if one considers that China, considered as one of the most important markets for Apple saw a decline in iPhone sales. Greater China (Apple includes Taiwan, Hong Kong and Mainland China in these numbers) recorded a -32 percent sequential change in Q2.
Also when Cook was asked about the situation in China, he revealed that the company was down 11 per cent in Mainland China, which is pretty big. In China, the smartphone market growth has all but slowed down. In contrast, India is still expected to grow in double digits in the smartphone space.
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On LTE and good networks in India
Tim Cook said one of the things that has held back smartphone players and not just Apple in the county is that the “LTE rollout…just really began this year.”
“We’ll begin to see some really good networks coming on in India. 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,” added the Apple CEO.
Many crucial Apple services are still missing on iPhones in India like the ability to show places nearby, Transit feature on Maps, a more proactive Siri that can give directions, etc, Apple Pay. We’ll have to wait and see when Apple starts rolling these out for India.
On distribution channels in India
According to Tim Cook, the distribution channel is another key to doing well in the Indian market.
He pointed out that unlike US, where carriers sell the vast majority of phones, in India distribution is different. “…in India the carriers in general sell virtually no phones. And so it’s out in retail, and retail is many, many different small shops,” said Cook.
In the past two years, we have seen Apple add a lot more channel partners in India and now has a lot close to five official distributors in the country. Of these, Redington is still handling a vast majority of the Apple inventory.
Been working hard on the market for last 18 months
“We’ve been working in India now for a couple of years or more, but we’ve been working with great energy over the last 18 months or so, and I’m encouraged by the results,” said the Apple CEO. He expects the efforts to gain more fruit in the coming months.
In India, Apple has applied for a license to open single brand stores in the country. A recent report said that the company recently gave a presentation to the DIPP Secretary-headed panel on why its products should be considered ‘state-of-the-art’, ‘cutting edge’ and thus exempted from mandatory local sourcing norms.
Expect India to grow, but still has a long way to go
Even though Apple iPhone sales have slowed down in other parts of the world, Cook said he was positive about India’s growth.
“It is already the third largest smartphone market in the world…But I view India as where China was maybe seven to ten years ago from that point of view, and I think there’s a really great opportunity there,” he added.
He also said that so far the dominance of low-end mobiles due to poor “network and economics” has meant that the market potential has not been fully realised.