India is a country where Apple (AAPL) must capitalize with iPhone sales to drive its next wave of growth.
While there is still upside in China, the U.S. market is mature, and with India having a population that’s nearly the same size as China’s — and a very underdeveloped smartphone market — it is of major importance to the world’s most valuable company, and for Apple stock.
Big Expectations in India Mean Big Impact to Apple Stock
According to a report from The Economic Times, Apple has set itself a target to sell 12 lakh iPhones in its current (launch) quarter.If successful, Apple would match last year’s Indian sales in a single quarter.
And further, Apple is reportedly aiming to sell 35 lakh iPhones for the coming year.
With that said, a lakh is an Indian measurement that translates to 100,000. Based on this report, AAPL is aiming to sell 1.2 million and 3.5 million iPhones for the current quarter and coming year, respectively. That would represent a big jump in iPhone sales for Apple in India, but is still a small number relative to the company’s total sales and India’s smartphone market.
Last year, Apple’s smartphone market share in India was roughly 2%. This year, smartphone sales in India are expected to reach 118 million according to Strategy Analytics, which would increase Apple’s share to 3% if iPhone sales reach 3.5 million.
Beyond that, India’s smartphone sales are expected to surpass sales in the U.S. in 2017, rising to 174 million, and then continue to grow at a similar pace long-term as the number of middle-class consumers jumps from 50 million to more than 580 million by 2025.
In other words, Apple has a great opportunity in India, and this current quarter and year will give investors a good idea of whether the tech giant will capitalize or not.
Apple Setting Itself Up for Success
As you might expect, India’s smartphone market is dominated by Android — a problem that Apple encountered when it entered China as well. Up until now, Apple’s presence in India has been virtually nonexistent.
However, Apple Insider recently reported that Apple is partnering with retailers in India to bring its products to 500 stores in 12 cities. That should boost Apple’s presence.
Nevertheless, Apple has ambitious goals in place and is making the necessary moves to increase the likelihood of strong iPhone sales both now and later. Given the growth and expectations that surround India, strong performance by Apple in India could be a blessing for Apple stock.
On the flip side, if iPhone sales underperform, it could be bad for Apple stock, seeing as how India is its last untapped growth market — a region with the potential to produce China-like growth for iPhone sales in the years ahead.
Bottom Line
While analysts, investors and columnists all around the world will be anticipating total iPhone sales when Apple reports its earnings later this month, the real important data for Apple is in India.
Most likely, Apple won’t report iPhone sales in India, but listen for data in the conference call, and then figure that information into your analysis of the stock.
After all, if India is important to Apple stock and business, and stock prices are nothing more than a reflection of future expectations, data about India could be a key indicator of where Apple stock goes from here.
As of this writing, Brian Nichols owned shares of Apple.
