Why Tim Cook Is Bullish On Apple’s India Story?

Apple has recorded a slight decline of 3% in revenue year-on-year, posting a figure of $94.8 Bn for the quarter ended March 31, 2023. The tech giant, however, maintained that the figure was within its expectations, with the June quarter looking set to have a similar on-year decline.

However, during the earnings call for the ongoing June quarter concluded on Thursday (May 4), India was one of the key focus areas, with the country being mentioned 19 times during the earnings call.

If Apple CEO Tim Cook is to be believed, India is on the cusp of becoming a significant market for the Cupertino-based tech behemoth.

“There are a lot of people coming into the middle class, and I feel that India is at a tipping point, and it’s great to be there,” said Cook during the earnings call, adding that he was “delighted and excited by the enthusiasm” for Apple in India.

Apple’s Performance

“Looking at the business in India, we did set a quarterly record (and) grew very strong, double digits year-over-year,” Cook said about the performance in India. The Apple CEO added that it was a good quarter for Apple in India, with the country being an ‘incredibly exciting market’ and a ‘major focus’ for the tech giant.

Similarly, Apple CFO Luca Maestri said during the earnings call that iPhone revenue overall reached a March quarter revenue record due to the very strong performance in emerging markets from South Asia, India, Latin America and the Middle East.

“We set March quarter records in several developed and emerging markets with India, Indonesia, Turkey and the UAE doubling on a year-over-year basis,” said Maestri. To be sure, iPhone pulled in a revenue of $51.3 Bn for Apple, accounting for around 54% of the total revenue for the tech giant during the March quarter.

Other major revenue streams for Apple included Mac ($7.2 Bn), iPad ($6.7 Bn), wearables, home and accessories ($8.8 Bn) and services ($20.9 Bn).

Talking more about the India opportunity, Cook said that there was a strong opportunity in the country in not just devices, but also services. The Apple CEO said there was still the issue of lower average revenue per user (ARPU) in India than in other regions in products such as TV, movie and music streaming.

“But if you look at it over a long arc of time, I think there’s a good opportunity across the board,” added Cook.

Unbelievable Vibrancy: Cook On India Visit

“I was just there, and the dynamism in the market, the vibrancy is unbelievable,” the Apple CEO said about his India visit in April, when he inaugurated the first two Apple Stores in India, in Mumbai and Delhi.

Cook added that he was delighted by the excitement shown by the customers, developers, creators and team members he spent time with. “Over time, we’ve been expanding our operations there to serve more customers, and three years ago, we launched the Apple Store online, and then, we launched two stores just a few weeks ago, and they’re off to a great start, one in Mumbai and one in Delhi,” said Cook.

According to CyberMedia Research (CMR), iPhone 13 series garnered a 48% market share in India, followed by iPhone 14 series at 44%. From purely a numbers perspective, Apple shipped more than 7 Mn iPhones and nearly 7.5 Mn iPads in India in FY23, CMR noted.

“Looking ahead, Apple enjoys some favourable tailwinds in India, a strong future growth driver. There is growing premiumization in the India smartphone market, backed by a healthy rurban demand for premium smartphones,” said Prabhu Ram, head of the industry intelligence group at CyberMedia Research.

Cook, who reinstated the tech giant’s commitment towards growing and scaling up investments in India. During the visit, the Apple CEO also met Minister of State for Electronics and IT Rajeev Chandrasekhar and Union Minister for Electronics and IT Ashwini Vaishnaw.

“Apple ecosystem has generated over 1 lakh new direct jobs in manufacturing over the last 24 months,” said Chandrasekhar in a tweet after the meeting in April.

India, China, Apple – A Delicate Equilibrium

“I think each country is different and has their own journey, so I hesitate to compare too much,” Cook said in response to a question about parallels between India and China in their respective journeys with Apple.

The Apple CEO added that India is seeing a lot of people entering the middle class, adding that the company hopes to convince a few of them to buy an iPhone.

However, the parallels between the two Asian powerhouses don’t stop at the consumer side, as India has positioned itself more and more as an alternative to China for Apple to diversify its supply chain and manufacturing.

This has resulted in Apple manufacturing nearly 7% of all iPhones in India in FY23, taking the production value to $7 Bn. For context, the number hovered at 1% in 2021.

Coupled with the many Apple contract manufacturers expanding their manufacturing in India, including the likes of Foxconn, Jabil and Salcomp looking to hire more people and boost manufacturing. These developments have seen Apple become the largest electronics blue-collar job creator in India.

While India continues to cast an ever-growing shadow on Apple’s map, the company is set to look at the country as one of its most important markets in the years to come.