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Turnaround year for Apple: Analysts

Counterpoint Research estimates iPhone shipments to have grown 6% in 2019, though on a smaller base after a 43% decline the year before. For the October-December quarter, it is estimating the growth to be 41%, more than double the pace of the premium smartphone market where it said the expansion was slower than the full year average of 20%.

, ET Bureau|
Last Updated: Jan 25, 2020, 02.02 PM IST
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NEW DELHI: Apple has likely posted a turnaround in iPhone shipments in the past year, boosted by strong double-digit growth in the final quarter, thanks to aggressive pricing and sales promotions and the success of the iPhone XR and the latest iPhone 11 series, analysts said.

Counterpoint Research estimates iPhone shipments to have grown 6% in 2019, though on a smaller base after a 43% decline the year before. For the October-December quarter, it is estimating the growth to be 41%, more than double the pace of the premium smartphone market where it said the expansion was slower than the full year average of 20%.

International Data Corporation (IDC) too sees iPhone sales to have increased in the past year with a strong double-digit expansion in the last quarter — both sequentially and from a year earlier. It didn’t give any specific shipment data for the year or the December quarter.

“It is possible for Apple to emerge as the largest premium brand in Q4,” Counterpoint associate director Tarun Pathak said.

Counterpoint had predicted the company to end the year with a 25% market share in 2019, compared with 23% the year before but still sharply lower than 44% in 2016 when it said Samsung was the only significant rival in the segment. The price cut for XR in the third quarter of last year started driving sales, it said.

IDC associate research manager for client devices Upasana Joshi also said Apple’s sales started picking up in the second half after starting the year a little slower than expected. Price “corrections” and offers such as cashbacks and no-cost EMIs on the older line-up helped boost shipments, she said.

“The deals struck with ecommerce players during the festive quarter further helped in garnering more volumes for Apple on key models like the iPhone7, 8/Plus series and the iPhone XR,” Joshi added.

According to IDC, which lists devices priced $500 and above in the premium category, Apple's share in the segment was 50.1% in July-September quarter, against 28.8% for Samsung and 10.3% for OnePlus. Counterpoint’s categorisation is slightly different.

Apple India didn't respond to ET's queries.

Analysts said Apple’s move to bring its latest iPhones — iPhone 11 and iPhone 11 Pro — to India in September, within a few weeks after the global launch, led to good results. Also helped was the aggressive pricing of the iPhone 11 — it was priced lower than the iPhone X.

“Usually, the new iPhone line-up is made available in Q4 of the year. But this year, it was made available in September itself,” Joshi said. Pathak agreed and said the roll-out was fastest for the iPhone range in India ever.

They said corrective pricing was a key to the quick success last year for Apple in the price-conscious India market.

Pathak said discounting the iPhone XR by $250 in the middle of 2019 made it Apple’s best-selling phone in India for two successive quarters.

The new line-up iPhone 11 also saw good growth, owing to apt pricing backed by offers, which analysts said would drive the sale in the first quarter of 2020 as well.

Typically, Apple’s older phones used to compete with OnePlus’ smartphones, but due to specifications and pricing, customers tended to move to the latter’s devices. With competitive pricing coupled with offers, Apple managed to shift focus to the iPhone 11, which yielded results for the company, analysts said.

In 2019, Apple shifted its manufacturing base in India with a long-term view of catering local demand and making India an export hub. This move is allowing it to save on direct import duty of 20% that it had incurred till a few quarters back, Joshi said.

“This [duty benefit] can be seen getting transferred to consumers in the form of discounts and offers for previous generation models and match the global launch prices for the newer series,” Joshi said. Prices of iPhones were higher in India owing to the duty structure.

Apple is currently doing CKD (completely knocked down) and SKD (semi knocked down) manufacturing through Foxconn and Wistron, respectively, in India of models like 6S, 7, SE and XR.

“Apple still continues to be an aspirational brand in India and the success of the iPhone XR and iPhone 11 indicates that Apple can grow faster in India provided with the right channel and pricing strategy in place,” Pathak added.


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