iPads are in demand

While the iPhone remains Apple’s primary revenue driver, there is a growing demand for iPads in India. Apple’s Senior Vice President and Chief Financial Officer, Luca Maestri, noted “iPad generated $7 billion in revenue, up 8% year-over-year. In addition to growth in developed markets, we also saw strong performance in many emerging markets, with double-digit growth in Mexico, Brazil, the Middle East, India, and South Asia.”

Apple saw an impressive 88% quarter-over-quarter growth in iPad sales from the April-June period to the July-September quarter, along with a 95% year-over-year increase for the same July-September period, according to CyberMedia Research. In the current quarter, the iPad 10 series accounted for a dominant 60% of total iPad sales, followed by the iPad 9 series at 17%, the iPad Air 2024 series at 16%, and the iPad Pro 2024 series at 7%.

“iPads, both older and newer models, also contributed significantly to the company's performance. The increasing aspirational consumer base in India continues to fuel the sustained demand for Apple devices,” adds Ram.

Corporate partnerships driving revenue

During the earnings call this morning, Apple leaders acknowledged that corporate orders are also contributing to growing revenue globally. For instance, the leading global pharmaceutical company Novartis has chosen the iPhone 16 as the standard mobile device for all employees. Similarly, UC San Diego Health is using the Apple Vision Pro in clinical trials for patient surgeries in the operating room. Enterprise sales have also been picking up in India. For example, India-headquartered Zoho has adopted Apple products, including iPhones and Macs. Luca Maestri, CFO at Apple, stated earlier this year, “Zoho, a leading technology company headquartered in India, offers its 15,000-plus global employees a choice of devices, with 80% of their workforce using iPhone for work and nearly two-thirds of them choosing Mac as their primary computer.”

Apple Stores driving growth

Another key factor contributing to Apple’s growth in India, alongside its aspirational hardware, has been the opening of two Apple Stores in Mumbai and Delhi in April 2023, for which Tim Cook flew down to India. Unlike any other retail store, Apple Stores are about the ‘Apple Experience’. Unlike typical retail outlets, Apple Stores focus on delivering the ‘Apple Experience.’ With all the Apple hardware on display, consumers have the opportunity to touch, feel, explore, and experience the devices without feeling rushed or pressured to make a purchase. Additionally, these stores serve as customer service touchpoints and community centers for consumers.

Earlier, Cook acknowledged that the performance of the new stores in India has exceeded the company’s expectations. During today’s call, he confirmed plans to open four more Apple Stores in the country. “We can’t wait to bring four new stores to customers in India.” According to available information, the new stores will be located in Bengaluru, Pune, Delhi-NCR, and Mumbai.

“The retail in India, for electronics, is shifting towards modern trade channels. Historically traditional retail channels in India have been contributing anywhere between 80-85% of smartphone and other electronics sales, while modern retail would contribute the remaining of the offline sales. But now consumers are increasingly showing preference to modern trade channels like large format retail and brand exclusive (COCO stores). We are expecting the modern retail channels to contribute over 35-45% in smartphone sales in the next couple of years,” says Faisal Kawoosa, Chief Analyst & Founder, Techarc.

Apple’s strategy to expand offline footprint goes very well with this changing consumer buying behaviour. Ram of CyberMedia Research highlights, “for many aspirational Indians, offline retail serves as an initial entry point into the Apple ecosystem, with the ability to interact with products firsthand being a significant factor in purchase decisions.” As a result, these upcoming Apple retail stores are expected to support Apple's growth in India’s competitive market.

Future growth potential

While the demand for iPads, Mac and services is expected to grow in India, the iPhone alone represents a significant growth opportunity for Apple in the country. Kawoosa of Techarc explains “India is now a slabbed market. Previously it was very polarised in the sense that there was over 95% entry level market and the remaining 5% was a premium market staggered at different price points. The 95% entry level market gradually stepped up and is not a feeder base for several upper segments, including the premium.”

According to Techarc, around 5-6% of India’s total smartphone user base owns a device priced between Rs 25,000 and Rs 50,000, translating into over 30 million users who could potentially be in the "feeder" segment for Apple’s iPhone. If Apple captures even 60% of this group—which aligns with its average market share in the luxury segment (priced above Rs 50,000)—the brand stands to gain an additional 18 million customers from this segment alone. This indicates a significant growth opportunity for Apple as it targets India’s upwardly mobile consumers.

“Leave aside those who are going to start their journey with an iPhone, and other outliers who have an irregular pattern and may directly switch from a sub Rs 15,000 to 20,000 smartphone to an iPhone,” adds Kawoosa.

Around 12% of active smartphone users in the Rs 15,000 to Rs 25,000 range are potential iPhone buyers, particularly among older generations, for models like the iPhone 12, 13, and 14. This represents a substantial base of more than 75 million smartphone users. “Here too, if 50% of the users upgrade to an iPhone, we have 37-38 million potential buyers of iPhones over the next few years. Together, these two feeder segments alone have the potential to create over 50 million iPhone users in the next 2-3 years.” He believes Apple should be able to sell approximately 15 million smartphones every year for the next 3-4 years, which translates to about 8-9% of the total smartphone sales in the country.

Furthermore, the urban aspiration that influences consumer behaviour in rural areas and smaller towns has led to increased adoption of Apple iPhones in these locations.

Apple stores

Apple bullish about India, clocks all-time revenue record