No saturation in iPhone sales; India to drive growth: Tim Cook

Apple said it set a new sales record in India for the six month period that ended March

Alongside posting highest ever earnings of $61 billion, up 16 per cent year-on-year in the March quarter, Tim Cook, CEO of the world’s largest company Apple, said that he wasn’t of the view that the global smartphone market, especially the market for the iPhone, had hit saturation.

Cook cited the example of India, the third largest smartphone market in the world, where Apple is still a small player in terms of market share. He continued his chime that as more people enter into the middle class in the country, sales of the iPhone would go up here, similar to what the company saw in China.

“India is the third largest smartphone market in the world. There's obviously huge opportunities there for us, and we have extremely low share in that market overall,” said Cook in a call with analysts soon after the company reported its earnings for the quarter that ended March 31, 2018.

He added that the company was putting in a lot of energy to work with carriers in India who have invested heavily into LTE network technology. “The infrastructure has come quite a ways since we began to put a lot of energy in there because of their leadership and so forth,” added Cook.

Apple and Cook, for the past few years have been of the opinion that India will become the next China, driving growth at a time when growth of smartphone sales was stalling globally. It is betting that as more individuals move up the socio-economic ladder, their growing discretionary spending will allow them to upgrade from a low-cost Android smartphone to an iPhone.

Today, smartphones running on Google’s Android operating system account for almost 95 per cent of all devices sold in the country. In 2017, Apple’s market share was under 3 per cent in India, despite its efforts to bring down the cost of its entry-level devices such as the iPhone SE which it began manufacturing locally along with partner Wistron in Bengaluru.

Cook assured investors that the company’s strategy was working as the company set a new record for sales in the six month period that ended March 2018. Apple’s financial year starts in October and ends in September.

“(In) India, we set a new first-half record. So we continue to put great energy there and try to – our objective over time is to go in there with all of our different initiatives from retail and everything else,” Cook said, without breaking out any specific numbers about sales or revenues for the country.

Apple has been trying hard to bring its retail stores to India, but has run into regulatory issues with respect to India’s local sourcing norms for single-brand retail. The company’s lobbying for a relaxation of the norms had gained some headway, before being turned down by the government.

When it approached the government to setup manufacturing plants for its devices in India, Apple demanded special incentives which the government has not agreed to yet. Instead, the Karnataka government was able to woo Apple’s partner manufacturer Wistron to repurpose one of its facilities to manufacture iPhones in the state, but sales of the model are said to be slow.

Another positive the Apple reported was that its strategy for cross selling iPhone customers its other devices was working. Cook reported that the company sold a record 4.1 million Mac personal computers and laptops in the quarter that ended March, setting a new record for revenues earned from its PC line.

“We sold 4.1 million Macs, generating year-over-year growth in many emerging markets including Latin America, the Middle East and Africa, Central and Eastern Europe and India. We were happy to see double digit growth in our active installed base of Macs to a new all-time high, with almost 60% of March quarter purchases coming from customers who are new to Mac,” Cook said.