Even as Apple beat market expectations by posting less than expected decline in sales for Q2 ended April 1 on Thursday, it pinned hopes on emerging markets for increased business, including India that’s now a focus market for the company.
Apple said sales for its fiscal second quarter ended April 1 fell 2.5 percent to $94.8 billion, ahead of expectations for a 4.4 percent decline, according to wire agencies’ reports.
India is at a “tipping point” and a major focus for Apple, the technology giant’s CEO Tim Cook said, terming the opening of its first two retail stores in the country — in Mumbai and Delhi — as a “milestone” for the company.
Speaking at Apple’s Q2 2023 earnings call on Thursday, Cook emphasised the dynamism and vibrancy in the Indian market, calling it “unbelievable”.
“Looking at the business in India, we did set a quarterly record, grew very strong, double digits year-over-year. So it was quite a good quarter for us. Taking a step back, India is an incredibly exciting market. It’s a major focus for us,” Cook said, according to a PTI report from New York.
Referring to his recent visit to India, Cook said in the earnings call, “I was just there, and the dynamism in the market, the vibrancy is unbelievable.”
Cook was in India in April, his first trip to the country in seven years, to open Apple’s first official retail store in the country, in Mumbai, followed by the launch of a second store in New Delhi. Cook said the stores are “off to a great start.”
Terming the opening of Apple’s first two stores in Mumbai and Delhi as a “milestone” for the company, the Apple CEO said, “…in a milestone for Apple, we just opened our first two Apple stores in India, in Mumbai and Delhi. I was there to see it for myself, and I couldn’t have been more delighted by the excitement and enthusiasm of the customers, developers, creators and team members I got to spend time with.”
“I’ve had the chance to connect with customers and teams all around the world in recent months, so many people shared with me that they were fans of Apple, not just because of the innovations we create, but because of the values that guide us, and that means a great deal to us,” he said.
He said that Apple has been expanding its operations in India to serve more customers.
“We’ve got a number of channel partners in the country as well that we’re partnering with, and we’re very happy with how that’s going overall. Overall, I couldn’t be more delighted and excited by the enthusiasm I’m seeing for the brand there,” Cook said.
He added that many people are “coming into the middle class, and I really feel that India is at a tipping point, and it’s great to be there.”
On Apple’s performance in other emerging markets, Cook said the company had a stellar quarter in emerging markets overall, with records set in several places, including Indonesia and Mexico, the Philippines, Saudi Arabia, Turkey, UAE, and quarterly records set in Brazil, India and Malaysia.
“It was a great quarter for emerging markets in general, despite the headwinds of the currency…and so we’re putting efforts in a number of these markets and really see, particularly given our low share and the dynamics of the demographics, et cetera, a great opportunity for us in those markets,” he said.
Responding to a question comparing the market in India today and that in China a decade ago, Cook said each country is different and has its journey, “so I hesitate to compare too much. But what I do see in India is a lot of people entering the middle class, and I’m hopeful that we can convince some number of them to buy an iPhone, and we’ll see how that works out. But right now, it’s working out well.”
In response to another question on which segment he sees the biggest opportunity for Apple in India, he said there is an opportunity across the board, including in services.
“Obviously, the ARPUs (average revenue per user) are lower in India for whether you’re talking about TV and movie streaming or music, the ARPUs are much lower than other regions. But if you look at it over a long arc of time, I think there’s a good opportunity across the board,” he said.
The company has set up a two-storey Apple store in Mumbai, covering an area of around 20,000 square feet. The Apple Saket Store in Delhi is half the size of the Mumbai store. The barricade for the Apple Saket store features a unique design that takes inspiration from the capital’s many gates.
The company has more than 70 highly skilled retail team members at Apple Saket Store who come from a combined 18 states in India and collectively speak more than 15 languages.
Meanwhile, a Reuters report stated that shares of the largest US company by market value rose two percent after Apple exceeded Wall Street’s expectations for revenue and profit for the April 1 quarter. The company’s results contrast with disappointing figures out of big chipmakers due to a slower-than-expected rebound in China’s economic growth.
Apple executives on Thursday said gross profit margins for the current quarter would be better than forecast despite an expected dip in revenue as supply-chain issues have improved.
Iphone sales were up 1.5 percent to $51.3 billion, besting expectations for a 3.3 percent drop even as consumers and businesses tightened up spending due to rising inflation. Global smartphone shipments fell 13 percent during the first three months of 2023, according to research firm Canalys, which said Apple gained market share against Android rivals.
A company statement quoted Apple CFO Luca Maestri saying, “Our year-over-year business performance improved compared to the December quarter, and we generated strong operating cash flow of $28.6 billion while returning over $23 billion to shareholders during the quarter.”