Tech giant Apple Inc.’s India unit has reported a slowdown in revenue growth to a seven-year low, hurt partly by the government’s banknote ban late last year that crimped consumer spending.
Net sales of Apple India Pvt. Ltd rose 17% for the year through March 2017 to Rs 11,619 crore ($1.8 billion) from Rs 9,937 crore the year before, according to its filings to the Registrar of Companies (RoC).
The growth rate is the slowest since 2009-10, when the company’s net sales had fallen 4.7%, according to VCCEdge, the data research arm of VCCircle.
Apple India had been growing by at least 40% annually for the past few years, as growing smartphone usage and Internet connectivity boosted demand for the company’s iPhones. The company’s sales had surged 53% in 2015-16 and 43.8% in 2014-15. Earlier, in 2011-12, the company’s sales had more than tripled.
The RoC filing didn’t specify any reason for the slowing growth. According to market research firm Counterpoint Research, the company sold 2.9 million devices in 2016-17 compared with 2.2 million devices the year before. However, analysts said that the 32% rise in sales volume didn’t result in a corresponding increase in revenue because actual selling prices (ASP) of handsets had dropped.
Tarun Pathak, associate director of mobile devices and ecosystem at Counterpoint Research, said that the ASP of iPhones had fallen 2% in 2015-16 and dropped further last fiscal year. “Most iPhones selling in India were older models contributing to 40% of overall sales. Hence the rise in sales volume may not be equally felt in revenue,” he said.
Navkender Singh, senior analyst at IDC, seconded Pathak’s opinion. “The $600-plus segment represents just 1.24% of the overall smartphone market and Apple owns 65% of this segment. Therefore, sales of high-end Apple iPhones don’t have much impact on revenue,” he said.
Another reason for the slowdown, say analysts, is the impact of demonetisation last year. The Indian government had banned high-value notes in November last year to crack down on graft and tax evasion. However, the move caused a widespread slowdown in consumer spending. The ban came in the middle of the holiday season, when Apple releases new products every year to boost sales.
Apple has been showing keen interest in India’s smartphone market after sales in China, once a major growth driver, slid 14% year-on-year to $10.7 billion in the January-March quarter. In a post-earnings analyst call, Apple CEO Tim Cook had said: “India is moving fast. They are moving at a speed that I have not seen in any other country in the world.”
He had also said that the company was strengthening its India presence and that the expansion of fourth-generation telecom infrastructure in the country was a “huge opportunity”.
Apple has tied up with Taiwanese manufacturer Wistron to set up a manufacturing plant in Bengaluru. The company is already making iPhone SE at the facility and plans to expand the plant. It is also likely to launch its Apple Pay service in India soon and has agreed to help the India government in developing an anti-spam solution.
The iPhone maker has also opened an App Accelerator in Bengaluru. The centre allows developers to avail tools and infrastructure to hone their skills, and improve the design, quality and performance of their apps on the iOS platform.
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