Apple Eyes Expansion In India As Growth in China Stalls 1

Apple’s seeks growth in India

In the first quarter of 2017, Apple’s (AAPL) sales in China (FXI) plunged by 14% as the company faced fierce competition from local manufacturers. Further, Apple’s market share in China – the biggest smartphone market in the world – fell 10% prompting the company to look for other avenues of growth.

Apple is finding an alternative to China (FXI) by entering into India (INDA)(PIN)(INDY). As per an IDC report, India is the fastest growing smartphone (FONE) market in the world, with smartphone shipment recording a growth of 14.2% in Q1 2017.

Chinese smartphone manufacturers largely dominate India’s market. Samsung (005930.KS) holds the top spot with 24% market share in 2016, while Chinese brands command 46% of the total smartphone market in India. Among the Chinese brands present in India, Xiaomi has the largest market share.

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Like China, India has proven a difficult country in which to gain market share for Apple. Apple’s positioning and pricing puts it into the premium category. India is a price sensitive market where Chinese smartphones are being sold in the range of $100 compared to Apple’s cheapest phone priced at $320. Experts believe a large proportion of sales of Apple and Samsung are driven by the need for an upgrade of these phones when a new device is launched.

In Q1 2017, Apple had a 3% market share in smartphone sales in India, according to a report by Kantar Worldpanel. Analysts expect it to grow as the smartphone market evolves and Apple continues to focus on strategic investments in the country. At its recent earnings call, Apple’s CEO Tim Cook expressed optimism on the country. “We believe, particularly now that the 4G infrastructure is going in the country and is continuing to be expanded, that there is a huge opportunity for Apple there,” Cook said while answering a question during the earnings call. “And so that and the demographics of the country is why we’re putting so much energy there.” Last week, Apple started assembling its iPhone SE phones at its Taiwanese contract manufacturer Wistron’s Bangalore facility.

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