When Apple stunned investors this week by reporting higher iPhone sales amid a downturn in the global smartphone industry, CEO Tim Cook attributed the increase to emerging markets such as India, where the company is pulling in Android phone customers.
Cook believes that those markets, with their younger populations and fewer iPhones, will bring more prospects for growth for the US-based tech giant.
Apple’s iPhone sales increased 1.5% to $51.3 billion in the fiscal second quarter, despite a 13% drop in global smartphone shipments from January to March, according to Canalys, which tracks global smartphone shipments.
Apple said it broke sales records in various countries across South Asia, Latin America, and the Middle East.
“We’re putting efforts in a number of these markets and really see, particularly given our low share and the dynamics of the demographics, a great opportunity for us in those markets,” Cook said on a conference call with analysts.
But Apple’s primary priority appears to be India, where the company recently launched two retail stores — the first in the country — in Mumbai and Delhi.
Banking on the middle class
While Apple did not disclose its revenue from the country, Cook told investors that it established a quarterly record. The year-over-year percentage increase was in the high double digits, he added.
“There are a lot of people coming into the middle class, and I really feel that India is at a tipping point, and it’s great to be there,” Cook remarked during the conference call.
Apple was the second largest revenue generating brand in India in 2022, trailing only Samsung, with 18% of the total share of smartphone shipments, research firm Counterpoint said.
For Apple, selling an iPhone in an emerging country represents more than simply the sale of a single gadget — it symbolises the opportunity to gradually hook users on Apple devices and services. Customers who begin with an iPhone may later upgrade to an Apple Watch or AirPods, or they may sign up for subscription services.
Cook stated that Apple sees prospects in services in India, but that average revenue per user – a metric known as ARPU in the subscription industry – will take time to catch up to Apple’s other regions.
Booming refurbished market
The creation of a thriving market for old iPhones is one of the reasons Apple has been able to acquire market share in both emerging and developed economies.
Global sales of refurbished iPhones increased by 16% in 2022. India led the market with a 19% increase, according to Counterpoint, with iPhones accounting for 11% of secondary smartphone sales in India.
In an interview on Thursday, Apple’s Cook stated that refurbished devices account for a small portion of the company’s direct iPhone income. But he said the company has attempted to boost the used iPhone market by offering trade-in deals and building phones to last multiple owners.
“We encourage the market and it provides us an opportunity to hit some price points that we would not otherwise play in,” Cook said.
- Reuters, with additional editing by Vishakha Saxena