Tim Cook is bullish on India being the new China for Apple. These 3 charts show there's a long way to go.
Anshuman Poyrekar/Hindustan Times/Getty Images
- Apple opened its first store in India — 14 years after first opening one in China.
- CEO Tim Cook often compares the opportunity in India to its progress in China.
- But charts show how India differs — and why that presents risks.
Apple has opened its first bricks-and-mortar store in India.
The Mumbai store opening attracted queues of around 300 people as customers stopped to take selfies with CEO Tim Cook and present him with vintage Apple devices.
Cook, who was in the country for the first time in seven years, appeared to match their excitement.
"The energy, creativity, and passion in Mumbai is incredible!" he wrote on Twitter. "We are so excited to open Apple BKC — our first store in India."
India has been a somewhat elusive market for Apple. Cook has been "optimistic" about the country for some time but government regulation and COVID-19 have slowed the company's plans for a physical presence.
India has strict rules around foreign entities doing business. Its government has become more liberal in letting in foreign retailers but there was, nonetheless, "a mandate that 30% of the sourcing should be done locally," Prachir Singh, senior analyst at Counterpoint Research, told Insider.
When the government relaxed this clause slightly in 2018, this finally allowed Apple to start planning for a physical store — but development paused due to the COVID-19 outbreak, he added.
This first store comes 14 years after Apple first opened in China, and Cook has sometimes compared the two markets.
"I see a lot of similarities to where China was several years ago. And so I'm very, very bullish and very, very optimistic about India," Cook told investors on an earnings call in 2017.
Is he right? We pulled together three charts breaking down Apple's risk and opportunity in India.
1. Android dominates the market
Android phones remain the devices of choice for the Indian population, thanks to a wide range of choice and how cheap they can be. Apple devices remain the preserve of a minority — likely the country's ultra wealthy.
The gap between the two systems is dramatic compared to wealthier markets such as the US and the UK.
In 2022, Apple beat out Android to claim more than half of the smartphone market for the first time in the US, according to previous data from Counterpoint.
In the same year, Apple only took 6% of the market share in India compared to Android's 94%.
2. Apple is capable of growing — see China
The chart above shows Apple's growth in China over the years. It looks small compared to Android and other operating systems, but that growth is impressive considering how many homegrown Chinese phone-makers it's up against. Huawei and Xiaomi in particular boast loyal consumers in their home market.
Apple has increased iOS device sales over the years to claim 17% market share from rivals, per Counterpoint Research's data.
That apparently small market share accounts for a disproportionate size of Apple's overall business. Greater China brought in 19% of Apple's revenue for its fiscal full-year 2022, per the firm's financials, making it the firm's third-biggest region behind the US and Europe.
For Cook, India could offer similar tantalizing growth.
Tarun Pathak, research director at Counterpoint Research, told Insider the Indian market presented an opportunity for Apple to target tens of millions of smartphone sales every year, increasing the 6 million units it currently sells.
"Comparatively, Apple sells more than 50 million units annually in markets such as China and USA. So, India has the potential to reach that scale from a domestic demand perspective in the coming years," he said.
3. But India's population is not as rich as China
There is a major area where China differs from India: how much its citizens have to spend.
Not only does China boast more billionaires than India, but the country also has a much bigger growing middle class.
Our chart shows wealth distribution by region — anyone in the top 1% is a US dollar millionaire. India has a much larger proportion of its population in the lower percentiles of wealth. China has a higher concentration of wealthier citizens.
As noted by analysts at Credit Suisse who compiled this data for 2022, India does have "significant" numbers of citizens in the upper echelons of wealth.
But, overall, Indian citizens have less disposable income than their counterparts in China, the US, or Europe, per World Bank data.
They have less cash to spend on pricey gadgets — and they have historically been even more expensive in India.
Apple's products have been available online in India for years, but are more expensive due to import fees and taxes. In 2022, the iPhone SE 2022 sold for a minimum of Rs 43,900, around $534, in India compared to around $380, around Rs 32,000, in the US, per CNBC.
All of that suggests growth will be slow. Pricing may fall as Apple ramps up Indian manufacturing, and Indians are becoming increasingly willing to pay more for their phones.
"There was an increase of 18% in average selling price for the first 2 months of 2023 compared to the previous year," Counterpoint's Pathak said. "In 2022, the share of premium segment smartphones (>INR 30,000 or around $360) has crossed the 10% mark for the first time, reaching 11%."
Pathak added that financing schemes could also encourage Indians to buy iPhones.
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