Indian market is not saturated: Apple CEO Tim Cook

Apple Inc. CEO Tim Cook said that the consumer electronics giant has set a new sales record in the first half, despite an overall slowdown in sales growth in India. Cook was speaking on the sidelines of Apple’s earnings call for the second quarter of 2018 on Tuesday.

Though Apple exceeded analysts’ expectations in India, investors are concerned over its slowing growth in major markets such as the US and China.

Cook said out of the half a billion feature phones sold every year, the developing world accounts for the bulk. The trend, over time, will shift towards smartphones and Apple will have a huge opportunity for growth.

“We set a new first-half record (in India). So we continue to put great energy there. Our objective over time is to go in there with all of our different initiatives from retail and everything else. It is a huge market and it is clear that many people will be moving into the middle class over time, as we have seen in other countries,” said Cook.

Apple India Pvt. Ltd’s growth rate was at 17% for 2016-17, the slowest since 2009-10, while its net sales had risen by just 4.7%, according to VCCEdge, the data research platform of News Corp VCCircle.

In 2016-17, its net sales had risen 17% to touch Rs 11,619 crore ($1.8 billion) from Rs 9,937 crore in the year-ago period.

Cook said that though Apple’s market share is low in many emerging markets, including India, Apple is looking to make iPhone the primary choice of consumers. Analyst estimates peg Apple’s market share at 3% in overall smartphone sales, but in value terms it commanded a bigger share because of the high product prices.

According to market research firm Counterpoint Research, the company had sold 2.9 million devices in 2016-17 compared to 2.2 million in the previous fiscal year. However, the 32% rise in sales volume did not result in an increase in revenue because actual selling prices of handsets had dropped.

“There’s obviously huge opportunities there (in India) for us, and we have an extremely low share in that market overall. We are working with the carriers in that market, and they are investing enormously on the LTE networks. And the infrastructure has come quite a way,” Cook added. He had previously said that the 4G rollout in India was the fastest for any country in the world and would help Apple sell more iPhones.

On whether the Indian market was saturated, Cook said: “I do not buy the view that market is saturated. I do not see that from a market point of view, and certainly not from an iPhone point of view. I think the smartphone market is sort of like the best market for a consumer product company in the history of the world…but that is how I feel about it. It is a terrific market, and we are very happy to be a part of it.”

Apple, which started manufacturing iPhones in India one year ago, has cut the price of some of its models. The majority of the iPhone SEs Apple sold in India were manufactured in its Bengaluru plant, which is run by Taiwanese company Wistron. Apple was hoping to save some money and avoid compounding of taxes. India accounts for less than 2% of its overall global revenue.