Apple's India growth hits 6-year low: What's the reason?
Apple is only $200mn away from hitting the $2bn-mark in India sales; Apple India reported sales of Rs. 11,619cr ($1.8bn) for FY 2016-17, compared to Rs. 9,937cr in FY 2015-16. The Cupertino tech-giant said India is one of its fastest-growing markets. Sales grew by 17% in FY17 compared to 53% growth in FY16; the demonetization-drive hurt Apple's sales and slowed down growth. Here's more!
Details about Apple's slow growth in FY17
Experts say there could be two primary reasons behind Apple's slow-paced India growth. Firstly, the Centre's decision to demonetize Rs. 500 and Rs. 1,000 notes in Nov'16 had a significant impact on sales of Apple and its rivals. Secondly, the "large base effect" likely pulled down growth. In India, Apple rapidly crossed the $1bn-mark; but reaching the next billion-dollar-mark of $2bn wouldn't be easy.
Smartphone sales suffer due to demonetization
Post-demonetization, not only Apple but also its competitors, including Samsung, suffered from slow sales growth. Following the note ban, consumer spending sharply declined as most people stayed away from purchasing high-value goods like electronics, including smartphones. Even e-commerce giants like Flipkart and Amazon India witnessed a fall in the sales of smartphones after the Modi-led government announced the demonetization of high-value currency notes.
Did older iPhones' sales contribute to Apple's slow growth rate?
Counterpoint Research's Associate Director, Tarun Pathak, said there could be another reason behind Apple's growth slowdown. He said older iPhones like 4S and 5S sold very well last year. The moderately-priced older iPhones appealed to consumers, who are used to seeing iPhones at a minimum price of $400. However, this decreased the average selling prices (ASPs), leading to a fall in growth rate.
India is one of Apple's most important markets
Apple executives said though Apple registered a modest 17% growth, the iPhone-maker generated nearly $1bn more revenue since FY15, when it crossed the $1bn-mark. India is important for Apple, which has started initial production of iPhone SE in Bengaluru and also started shipping. Karnataka's government announced Apple's proposal for beginning manufacturing operations in Bengaluru in Feb'17. Taiwan's Wistron manufactures the devices for Apple here.
I do feel great about the growth rate: Tim Cook
Recently, in a post-earnings call with investors, Apple CEO Tim Cook emphasized how important India is, as its revenues here more than doubled year-over-year in the September quarter. He said, "I feel like we're making good progress there (India)...gaining understanding of the market, but we still have a long way to go, which I sort of see as an opportunity instead of a problem."
India is an incredible opportunity: Apple's Eddy Cue
In October, Apple's Senior Vice-President Eddy Cue stated: "At the Apple level, India is an incredible opportunity...what we're seeing is huge advancements in digitization, bypassing older technologies to newer technologies...we think that we have a really great product that can help move things even faster."
