Apple (AAPL 2.20%) made terrific progress in India in fiscal 2021 (which ended on Sept. 25, 2021), with CEO Tim Cook pointing out that the company's revenue in that market doubled over the prior year thanks to the robust demand for its products.
Calculations indicate that the tech giant generated $4 billion in revenue from India last fiscal year. More importantly, recent data suggests that Apple is on track to maintain its terrific momentum in the Indian market in the new fiscal year as well. Let's see why that may be the case.
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Apple's products are selling like hotcakes in India
The iPhone and the iPad are in great demand in the Indian market. According to third-party estimates, Apple's iPhone sales in India jumped 150% year over year in the fourth quarter of fiscal 2021 -- for the three months ending in September 2021 -- to 1.53 million units. Sales of the iPad reportedly increased 109% year over year to 240,000 units during the quarter.
Apple kept up its impressive pace of growth in India during the quarter that ended in December. CyberMedia Research estimates that iPhone sales jumped 48% year over year last quarter to 2.2 million units despite supply chain-related challenges. For calendar 2021, Counterpoint Research estimates that Apple's iPhone shipments in India increased 108%, with Apple controlling 44% of the market for phones priced above $400.
It is also worth noting that the iPhone 12 was the most sold Apple smartphone in India in the fourth quarter of 2021, accounting for a 40% share. That isn't surprising, as there were significant price drops to the tune of 25% on the iPhone 12 Pro after the launch of the new generation iPhone 13 models. The regular iPhone 12 and the mini variants also received substantial price cuts, while interest-free installments and trade-in programs made Apple's devices even more affordable for Indian consumers.
Apple is expected to capture more market share in India this year on the back of new products, such as an entry-level iPhone SE 5G that's expected to be launched next month, an increase in local manufacturing, and a bump in retail presence. It is worth noting that Apple's smartphone market share in India reportedly doubled last year to 4%, and is expected to increase to 5.5% this year.
Another strong year is in the cards
The average selling price (ASP) of smartphones in India increased 14% in 2021 to $227, driven by an increase in the demand for premium smartphones (priced at $400 or higher). According to IDC, Indian consumers now prefer higher-priced devices instead of sub-$200 phones, and that's playing in Apple's favor.
We have already seen that Apple enjoys a 44% share of the $400-plus smartphone market in India, and that could be a key growth driver for the company there in 2022 and beyond. That's because Indian consumers are purchasing 5G smartphones in great numbers, with shipments of devices supporting the latest wireless standard increasing a whopping 555% in 2021.
However, only 17% of smartphones in India are 5G-enabled, indicating that there is terrific room for growth in this space. Additionally, the ASP of a 5G smartphone in India stood at $401 last year, according to IDC. So Indian consumers are paying a premium to purchase 5G smartphones.
This explains why Apple has been enjoying impressive growth in the Indian smartphone market. Given that the Indian 5G smartphone market is in its nascent phase right now and Apple's rumored 5G iPhone SE is expected to be priced under $399, the new device could give the company a nice boost in that market this year and beyond.
As such, Apple seems to be on its way to posting another year of strong revenue growth in India this year, as it seems to have finally cracked the code there.
Apple generated $366 billion in revenue last fiscal year, which means that India contributed to just over a percent of its top line. However, the country's contribution to Apple's overall revenue is likely to increase this year on the back of higher market share.
More importantly, India could become a significant market for Apple in the long run, as 5G smartphone sales increase there. India's 5G smartphone sales are expected to increase to 88 million units in 2025 according to GSMA, an industry association of telecom operators. That would be a big increase over the 29 million 5G smartphones that were shipped in India last year.
Apple is already in a solid position to tap into this emerging 5G opportunity in India, and that could give the company's revenue and earnings a nice boost in the long run as it gains ground in the world's second-largest smartphone market.
