India has long been one of the most difficult markets for Apple (AAPL -0.09%) to crack. After years of revamping its efforts, Apple is finally starting to make some progress on numerous fronts. The company scored political points by shifting production of certain iPhone models to India, which helped meet local sourcing regulations, avoid import tariffs, and paved the way for it to open its first retail store in the world's second-most-populous nation. The company's retail debut is expected next year, CEO Tim Cook told investors at Apple's annual meeting in February.
Recent data suggests that iPhone shipments in India soared in the first quarter.
Apple leads the ultra-premium category
Yesterday, Counterpoint Research released estimates that showed India's broader smartphone market growing 4% to 31 million units in the first quarter. Volumes were marching steadily higher in January and February, but then the coronavirus outbreak extracted a toll on March volumes after the Indian government initiated a drastic lockdown on the entire population of 1.3 billion people in an effort to combat the disease.
Counterpoint Senior Research Analyst Prachir Singh noted that economic activity declined in mid-March and consumers are shifting financial priorities away from discretionary spending toward savings due to macroeconomic uncertainties related to the coronavirus outbreak. Entry-level handsets should take the biggest hit during the lockdown, which the government has started to ease.
Due to the iPhone's premium pricing, Apple has always struggled to establish a meaningful foothold in India, which also means that it has a fairly small customer base in the country. That's important context, as Apple's units grew an estimated 78%, according to Counterpoint. The iPhone 11 has proven popular and consumers have been able to snag discounts on various e-commerce platforms. The Cupertino tech giant is the top brand within the ultra-premium segment of the market (phones that cost around $600 or more).
Low-cost vendors like China's Xiaomi and VIVO lead the way in the first quarter, grabbing 30% and 17% market share, respectively. Samsung came in No. 3, as the South Korean conglomerate addresses virtually all price points with its expansive portfolio.
Apple has now discontinued the iPhone 8 in India, supplanting that device with the new iPhone SE. However, the iPhone SE is still positioned at the high end of the market (approximately $560 at current exchange rates) since import tariffs still apply to the SE (that model is not produced in India) and the Indian rupee has depreciated against the U.S. dollar in 2020. Exchange rates have moved quite a bit in the past couple months, with the U.S. dollar strengthening even more.
India remains a small market overall for Apple, with Cook disclosing for the first time that revenue in India was $2 billion in 2018.