With Apple running into problems in China, it’s been upping its focus on India as another relatively untapped market where Cupertino hopes to expand its market share. But can India, which has a population of 1.25 billion people, really serve as a substitute for China, with its comparative 1.36 billion people?
Not according to a group of Mizuho Securities analysts, who argue that regulatory politics, competition, low wages and lack of carrier support are all obstacles in India which means it will struggle to offset a slowdown in Apple’s China business.
“Based on our extensive analysis of opportunities presented by India and its comparison with China, India is unlikely to help offset the slowdown in China due to lower wages, strong incumbents at very attractive price points, lack of carrier support and the political environment,” the analysts note.
“Even if [Apple] gets full access to the Indian market, the region will likely contribute $9-10 billion in revenue (4-5% of total sales), which might not be enough to move the needle. Over the next couple of years, India is unlikely to contribute more than 2-3% of total sales.”
As noted, Apple has been focused heavily on India as of late, with Tim Cook and other top executives recently making a packed visit to the country. Apple also has plans to open own-brand Apple Stores in India, to invest $25 million in a new office complex in the country, along with a brand new local office dedicated to Apple Maps.
Not everything has been smooth sailing, however, with Indian officials pushing Apple to source more of its products locally, while a recent court verdict barred the company from importing refurbished iPhones to sell at a lower price point to Indian customers.
In other words, it seems that India’s more of a long-term goal than a short-term substitute for falling sales elsewhere.
Source: Barrons
