Apple India's revenue almost doubles in Q1 on discounts, BNPL: Experts

Attractive discounts and buy-now-pay-later (BNPL) options, along with enterprises lapping up Apple products, helped shore up the tech giant’s revenues in India during the April-June quarter, say experts.

However, shipments of the iPhone, the entry point into Apple products in India, still constitute only a tiny 3 per cent of the country’s smartphone market.

The Tech giant reported a "near doubling" of its revenues in India in the quarter ended June 2022 — all the more remarkable because it came amid declining overall smartphone demand in the country.

Market analysts say a higher average selling price (ASP) than competitors helped Apple bag large revenues in countries such as India. The average selling price of an iPhone is $930-$1000 in India, five times the ASP in the overall smartphone market.

“When the entire market sold 160-161 million units, Apple had just 5 million shipments. So, in terms of volumes, it might be in seventh or eighth place. But, if you talk about the revenue share, Apple was at number three in Q1 FY22,” said Upasana Joshi, research manager at IDC. 

Another reason consumers are warming to Apple, Joshi says, is the price correction some of its models have seen, making them relatively affordable and not just aspirational. “There was a certain discount along with cashbacks and bank offers,” she said.

Apple has further headroom to grow, as it is still restricted to the big cities. “The leading 50 cities of India, which is a conglomerate of Tier 1 and Tier 2 cities, account for 60 per cent of the volumes for the India market. So, there is still a lot of potential for the iPhone to penetrate deeper into the market,” said Joshi.

A recent report from market research firm Counterpoint said the consumer trend in mid-range smartphones was inclined toward smartphones with options to pay later. “Users are going in for mid-tier and high-tier (products) especially when their dependency on a smartphone increased during the pandemic. Plus, EMI, BNPL, and other financial schemes brought down the upfront cost for the buyer,” said Tarun Pathak, research director at Counterpoint.

According to the report, Apple’s revenue received a boost with the opening of its India e-s​​tore, the launch of the iPhone SE 2022, and offers on other models.

Pathak said the entry premium segment, priced at Rs 30,000-45,000, is where Apple has a high potential to grow. “Both iPhone 13 and 12 are going strong and, with new launches coming, all these models will stay relevant in India especially when the country is at the cusp of a tech transition,” he added.

India remains a price-sensitive market even in the premium category of smartphones. “The cheapest iPhones still account for a majority of Apple’s volumes, which shows how price sensitive we are. In India, iPhone  Pro and Pro Max do not do that well,” said Joshi of IDC. The price of the iPhone 11 is Rs 49,900 on Amazon and Rs 51,999 on Flipkart.

"There has been an increase in demand, especially for the premium smartphones across the country. During the last quarter, we have observed over 50 per cent increase in premium smartphone customers from Tier 2 and 3 cities," a Flipkart spokeperson said.

Apple remains an aspirational  brand in India and cheaper iPhones drive the shipments. “The iPhone 12 and iPhone 11 together account for 45-50 per cent of the entire 5 million iPhones sold in India in 2021,” said Joshi.

The price constraints become more evident in smaller towns, where the purchasing power is lower than in the metros. “Smaller towns still do not buy a lot of iPhones. There you can certainly see the second-hand Apple phones sell more because of their affordability. Aspiration is certainly there, but buyers prefer a good second-hand device,” she added.

Another reason why Apple could double its India revenue is the rising popularity of its laptops. Luca Maestri, senior vice-president and chief financial officer, Apple, said more and more enterprises were buying Apple products.

“In the enterprise market, our customers are increasingly investing in Apple products as a strategy to attract and retain talents,” he added.

He gave the example of information technology services giant Wipro investing in Apple products, such as the MacBook Air with M1 chips, as a competitive advantage when recruiting new graduates globally. “With the new M2 chip powering the MacBook Air and the 13-inch MacBook Pro, we expect more customers to make Mac available to their entire workforce,” said Maestri.