Apple sets all-time India revenue record; iPhone growth may fall going forward

Apple Inc. beat Wall Street analyst estimates for the September quarter even as it set a new all-time India revenue record on the back of growth not only in smartphones but also in other device categories such as its Mac line of personal computers (PCs).

On Thursday, Apple announced a record quarterly revenue of $90.1 billion for the September quarter. During a call with analysts and investors, Apple chief Tim Cook underscored that India has seen “very strong double-digit growth”, while Luca Maestri, chief financial officer of Apple, said India set “a new all-time revenue record” for the company.

To be sure, Apple has consistently reported strong performance in India over the past two years, with Cook stating record quarterly revenue in India in the June quarter this year as well. The company presently has its largest market share in the premium smartphone category in India. According to Counterpoint data sourced by Mint, Apple held 44% market share for premium smartphones (priced above ₹30,000) in India, which fell to 37% in the first half of the year off the back of weakening consumer demand.

Apple India Private Limited’s balance sheet for financial year 2021-22 (FY22), according to company financials and research platform Tofler, pegged its operating revenue at ₹33,312.9 crore--up 45.8% year-on-year (YoY) over the year ago period. However, a higher cost of sourcing its inventory in the country, buoyed by local manufacturing of devices and higher shipment volume of its Mac lineup of PCs, saw the company’s ‘purchase of stock in trade’ stand at ₹26,788.7 crore for FY22. As a result, Apple India’s net profit for FY22 rose 3% YoY to ₹1,263 crore. The 'purchase of stock in trade' metric refers to the total amount of goods sourced by a company to be sold during a financial year. This is different from the unsold inventory metric, which refers to the total amount of goods sourced — but left unsold — during the respective financial year. According to analysts, the purchase metric refers to a company's anticipation of higher market demand.

IDC’s Singh said that going forward, Apple will continue to report high double-digit revenue growth, as device categories beyond the iPhone grow. “Apple’s overall volume and market base in India continues to remain fairly limited, and the iPhone is unlikely to grow sharply. But, other segments will continue to consolidate its overall performance in the country — such as a rising number of enterprise partners sourcing its Mac line of PC products for employees,” he added.

Industry analysts point out, though, that despite Apple’s growth in India, the company’s market share in India is expected to remain in the 5% range, for both PCs and smartphones.

Navkendar Singh, associate vice-president for client devices at market research firm International Data Corporation (IDC) India, said that even if Apple registers higher-than-ever revenue, its shipment volume may not be corresponding to the former. “Apple’s iPhone shipment in India reached around 4.8 million units in CY21, which was a rise of nearly 75% from CY20. Even as the company continues to register record revenues, it is important to note that the same comes off the back of a low volume base for Apple in India. But the company may not see a similar rise in India this year, even if its revenue in the country continues to rise,” Singh said.

He added that Apple is likely to see a rise of around 20% in its iPhone volume in India for CY22, with its iPhone shipment volume estimated to reach 6 million devices at most. This, Singh said, would continue to keep its overall market share in the smartphone market below 5%.

Pathak corroborated that the availability of more affordable iPhones ranging from 2019’s iPhone 11, coupled with heavy discounts on 2021's iPhone 13 during the recently-concluded festive season sales, will see the company’s market share in the premium segment aggregate to around 50% for CY22.

Further, Apple’s shipments of new smartphones in India accounted for 2.7% of all new smartphones in the country in the June quarter. While this is higher than its 1.8% share of new smartphone shipments in the June quarter of 2021, its low gross volume means that the company’s overall market share of smartphones in India will likely remain below 5% in CY22 as well — even after the festive boost.

The good news for Apple, however, is that growth in India was driven by iPads, Macs and services, which could be a sign that the company is increasing its reach among Indian users, despite its products being considered ‘premium’. What appears to be driving Apple to its highest ever quarterly revenue in India is a rising market share for personal computers (PCs), particularly in the enterprise segment. Tarun Pathak, research director at research firm Counterpoint India, said that Apple entered CY22 in India with its highest ever installed user base in the country — thanks to the rise of iPhone users last year. “Given that the iPhone is the typical entry point for Apple’s users in India, this has started trickling down to other categories for the company as well — such as Macs, iPads and services,” Pathak said.

In Apple’s June quarter earnings, CFO Maestri said that Wipro, one of India’s ‘big four’ information technology (IT) services company, signed an enterprise deal with Apple to offer the company’s MacBook Air laptop to new recruits. According to a Counterpoint India report from August 21, this was part of a 50% rise in Apple's market share in the Indian enterprise PC segment for H1CY22.