Apple Sees ‘Flat’ Growth in India, but CEO Tim Cook Is Still ‘Very Bullish’

Apple Sees 'Flat' Growth in India, but CEO Tim Cook Is Still 'Very Bullish'

A couple of quarters after setting a new first-half record in India, Apple saw flat growth in the country in the company’s fourth fiscal quarter, CEO Tim Cook revealed on Thursday. The executive, while speaking with analysts in a conference call for the fiscal fourth quarter, said that he was a “big believer” in the Indian market and “very bullish” on the country despite having current hardships. Apple CFO Luca Maestri highlighted during the call that the company recorded “strong growth” of Mac and iPad devices emerging markets including India. However, neither Cook nor Maestri specified the performance of iPhone models in the country. Some recent research reports mentioned that the iPhone range had a market share of about one percent in the country that is a growing market for a list of Android devices, especially with a strong domination of Chinese companies and Apple arch-rival Samsung.

Answering a question on the performance of Apple in emerging markets including India, Cook said that they’re seeing pressure. “To give you a perspective in of some detail, our business in India in Q4 was flat,” he said. “Obviously, we would like to see that be a huge growth.”

One of the major challenges that Apple is facing nowadays in India is the weakening value of rupee against the US dollar. However, Cook is optimistic about growth in the long term. “The currency weakness has been part of our challenge there [in India], as you can tell from just looking at the currency trends, but I view these as speed bumps along a very long journey, though,” he said. “And the long term I think is very, very strong there. There’s a huge number of people that will move into the middle class. The government has really focused on reform in a major way and made some very bold moves.”

It’s been several months since Apple began manufacturing some of its iPhone models in India. The company has also been in discussions with the Indian government with the aim to bolster its local presence in the country through Apple Stores. Cook asserted that the company had “great productive discussions” with the government that could eventually help establish stores in the country. “[T]here are import duties in some or most of the product categories that we’re in,” he stated. “In some cases, they compound, and this is an area that we’re giving lots of feedback on. We do manufacture some of the entry iPhones in India, and that project has gone well.”

“I am very bullish on the country and the people and our ability to do well there,” he added.

While it had flat growth in India probably due to contracted market share of its iPhone models, Apple sold over 46.9 million iPhones in the last quarter, slightly lower than analysts expectations of 47.5 million units, according to FactSet. The company also generated an overall quarterly revenue of $62.9 billion (roughly Rs. 4.58 lakh crores). This was majorly driven by the increased average selling price of the iPhone family that reached $793 (roughly Rs. 57,700).

Last month, Apple launched the iPhone XR₹ 76,900 as the most affordable model in the 2018 iPhone range. The new model has an iPhone X-like design and comes with a starting price of Rs. 76,900 in India. This is lower than the price of the two flagship models – iPhone XS₹ 89,900 and iPhone XS Max₹ 99,000 – that start at Rs. 99,900. This could help the Cupertino giant increase its market share over time.

Alongside bringing the iPhone XR as the new affordable iPhone model, Apple has been promoting Indian talent on its services such as Apple Music and the App Store to expand its presence in the country. The company is also evaluating various retail initiatives to leverage the potential of the Indian market to mark growth in the long run.

Unlike its last quarter performance in India, Apple had a “very strong last quarter” in China. Cook said that the company had grown 16 percent, and iPhone emerged as a strong product with a “double-digit growth” was seen in the fiscal fourth quarter. However, the App Store in China saw a “slowdown or a moratorium” due to a new regulatory setup.