💎 Apple's Secret Plan to Woo 600 Million Indian Smartphone Users?

A couple of weeks ago, Apple opened its largest and first dedicated store in Bandra Kurla Complex, Mumbai.

While driving home from work that day, I passed the store and was amazed by the huge crowd. While Apple's success story is well-known, it's fascinating to delve into how the company generates revenue, particularly in the Indian market.

In this week's newsletter, let's dive into Apple's revenue breakdown, the reasons behind the iPhone's global success, and its endeavours to crack the Indian market with its new strategies and future plans.

Source: Apple

Before we begin, let's answer the million-dollar question.

How much money does Apple make, and how?

In FY22, Apple generated $394 billion in revenue, marking an 8% increase or $28.5 billion growth compared to 2021. Increased net sales of the iPhone, Services, and iMac mainly fueled this impressive growth.

Apple's revenues come from a diverse range of sources, and here's the breakdown based on the 2021 fiscal year:

iPhone: 57.8% - The iPhone has been Apple's flagship product since 2007 and continues to be the primary source of revenue. The company consistently releases new models with improved features and performance, driving sales and customer loyalty.

Services: 15.8% - Apple's services segment includes a range of offerings, such as Apple Music, Apple TV+, Apple Arcade, iCloud, and the App Store. These services generate revenue through subscriptions, in-app purchases, and developer fees.

Wearables, Home, and Accessories: 11.9% - This category comprises products like Apple Watch, AirPods, HomePod, and various accessories (cases, chargers, cables, etc.). These products complement Apple's primary devices and enhance the overall user experience.

iMac: 8.8% - Mac computers, including MacBook, MacBook Air, MacBook Pro, iMac, Mac mini, and Mac Pro, contribute significantly to Apple's revenue. The Mac lineup caters to many users, from casual consumers to professionals.

iPad: 5.9% - Apple's iPads, which include iPad, iPad mini, iPad Air, and iPad Pro, cater to a broad audience, from students and casual users to creative professionals. iPads contribute a smaller portion of Apple's revenue than other product categories.

Note: The revenue reported by Apple in 2004 was $8 Billion. The brand has grown speedily over the past two decades, with more people switching to Apple products.

But what makes Apple so attractive to users?

Why are Apple products a global success?

The brand Apple has been a remarkable success story, and several factors contribute to its global popularity:

• Design and user experience: Apple's focus on design and user experience has consistently set it apart from competitors. The iOS platform offers a smooth and consistent user experience across devices. For example, consider the iMac, which boasts an exceptional quality display, superior audio, a slick design, and ease of use.

• Innovation and technology: Apple has a reputation for pushing the boundaries of technology and introducing groundbreaking features in its devices, leading to a loyal consumer base. A prime example of Apple's excellent innovation was the iPhone. When the late Steve Jobs first announced it, the iPhone combined three devices— a mobile phone, an iPod, and an internet communication device. Back in 2007, that was a big deal.









• Ecosystem and integration: Apple has created an ecosystem of products and services that work seamlessly together, encouraging consumers to invest in multiple Apple devices and services. Take the Apple Watch, for example; it is designed in such a way that to be able to use the device, the user must own an iPhone. This brilliant strategy retains its users within the Apple bubble.

• Brand value and prestige: Apple has positioned itself as a premium and aspirational brand, with consumers often viewing the ownership of an iPhone as a status symbol. Despite such huge success globally, Apple's market share in India is quite low.

Has Apple cracked the Indian market yet?

India is the world's second-largest smartphone market but is significantly an Andriod-driven market.

India is a unique market with its unique challenges and opportunities. Apple's premium pricing strategy has been a hurdle in a market where price sensitivity is high, and budget smartphones dominate.

In fiscal 2022, Apple generated $74 billion in sales in China, Hong Kong, and Taiwan. This amounts to around 18% of Apple's overall income for the period. India is still not there.

Apple's market share in India is less than 5%, far from its dominance in other regions. It is included in the rest of the Asia Pacific group alongside other markets, which only generated $29 billion in sales over the same time frame.

Apple's India strategy

Despite the challenges, Apple has not given up on the Indian market. In recent years, the company has taken several steps to strengthen its foothold:

• Local manufacturing: With about 7% of its overall iPhone production now being produced in India, up from 1% in 2021, Apple has dramatically increased its local iPhone production.

• Expansion of retail presence: Apple has just established its first flagship store in Mumbai and plans to expand its retail presence nationwide.

• Focus on services: Apple is investing in expanding its services portfolio in India, including Apple Music, Apple TV+, and iCloud.

• Affordability and financing options: Apple has introduced attractive financing options, trade-in programs, and discounts to make iPhones more affordable for Indian consumers.

And these efforts are bearing fruit. According to a recent report from Bloomberg, Apple India's revenue almost reached $6 billion, up from $4.1 billion in the year ending in March 2022, i.e., nearly a 50% increase in sales y-o-y.

Meanwhile, who is ruling the Indian mobile phone market?

While Apple strives to expand its presence in India, other smartphone manufacturers have already established a strong foothold in the market. Here's a quick look at the top 5 mobile brands by market share in India:

If you look deeper, you will notice that in the past year, the market share of 'others' has grown while most of the top 5 players lost a percentage of their share. And well, Apple is one of the 'others'.

In conclusion, Apple's journey in India has been challenging but promising. The company's recent strategic moves demonstrate its commitment to winning over the Indian market. It will be interesting to see how Apple navigates the competitive landscape and adapts to its unique needs.