Apple grew 44% in India, generating half the revenues but 10x the profits of Xiaomi, Vivo,...

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Apple's Fiscal Year 2017 (ending in March) revenues in India grew YoY by 17 percent and its profits in the subcontinent grew by 44 percent, despite intense competition from Samsung and a series of Chinese makers working to flood the emerging nation with cheap smartphones.

Apple in India

Apple's game plan for India

That data, published in India Times by Writankar Mukherjee, comes from a Registrar of Companies regulatory filing by Apple. Now that growth in the massive Chinese market is beginning to contract, new focus is being given to India as a rapidly growing new market for phones with vast potential.

Apple's strategy in India appears to parallel its basic game plan for the U.S. and China: a focus on sustainable profitability with premium products. At the same time, the company has pursued efforts to make its products more affordable, including an initiative to sell remanufactured phones in the country--a plan that was challenged by the government. Rather than pulling its profits out of India, Apple is reinvesting its returns "for further expansion of local operations"

As with China, Apple's total unit share of sales in India is falling as cheap models flood the market. However, an influx of low-priced smartphones hasn't stopped Apple from growing or profiting from its operations in India.

Rather than pulling its profits out of India, Apple is reinvesting its returns "for further expansion of local operations" according to a senior industry executive cited in the report. Those plans appear to include both manufacturing and retail stores.

In January, the Indian government granted a waiver for five years on its taxation and sourcing laws that require "single-brand retailers" that are foreign owned to meet a 30 percent sourcing requirement for goods sold. Apple is now reportedly hoping to build flagship retail stores in New Delhi, Bangalore, and Mumbai.

Apple also started assembly of iPhone SE models at a Wistron facility in Karnataka, India, that has reportedly also started building more affordable iPhone 6s models as well.

India playing out a lot like China

Counterpoint Research stated that Chinese makers Xiaomi and BKK (the company producing Vivo and Oppo phones) drove smartphone shipment volumes by nearly 800 percent last year to Rs 22,527 crore (US $3.4 billion). Despite those sales, only Xiaomi reported any actual profit, of just Rs 163.9 crore (US $24.5 million; crore refers to "ten million" Indian Rupee).

In comparison, Apple's income in India amounted Rs 11,704.5 crore ($1.76 billion) in FY17--half the revenue of the three largest Chinese brands. Yet it generated profits of Rs 1,556.5 crore (US $234 million), about ten times the annual profits of Xiaomi (and its unprofitable BKK competitor).

Looking forward, Tarun Pathak of Counterpoint stated that "the financial performance for Apple India in the last fiscal will not be much different with one of the highest profitable models in the portfolio. Their installed base and average selling price too are going up in India."

In the most recent March quarter, Counterpoint estimated that Apple's share of the Rs 30,000+ (US $450+) segment was eclipsed in market share taken by premium models sold by Samsung and BKK's One-Plus brand. However, most of Apple's sales are at the higher end of the premium segment, with a global average selling price of nearly $800. Still, the company faces intense competition in smartphone sales from companies that are hard pressed to find any unit growth in China.

Xiaomi has previously indicated that it planned to make virtually no money in phone sales and eventually make money from services targeted at its installed base, but Android buyers have little keeping them attached to any specific vendor, and Xiaomi has yet to produce any impressive results from its services offerings.

On the other hand, Apple's Services (including Apple Music, iCloud and app subscriptions) are growing rapidly, from a base of customers who are the least likely to even consider moving to another platform.
watto_cobra

Comments

  • Reply 1 of 15
    adm1adm1 Posts: 808member
    Great for Apple, but Google must be laughing all the way to the bank thanks to these penny-profit manufacturers - they just have to sit back and watch as these guys do the hard work flooding the world with android-based hardware for little to no profit, giving el goog an endless stream of new users (and their oh-so-valuable personal data).
    watto_cobra
  • Reply 2 of 15
    rogifan_newrogifan_new Posts: 2,840member
    So Apple’s figures are based on a regulatory filing but the rest is estimates by the firm Counterpoint Research. Counterpoint isn’t going to know how much profit companies are making off their smartphones. No one reports their financials that way. Apple doesn’t either.
    muthuk_vanalingamsaltyzip
  • Reply 3 of 15
    MacProMacPro Posts: 17,289member
    Come on AI, we all know it's only volume that counts /s
    watto_cobra
  • Reply 4 of 15
    SoliSoli Posts: 7,337member
    It'll take awhile (perhaps decades) but India will be the new China. Continued globalization will help increase India's GDP, bring jobs to the people, and bring a large portion of their population out of extreme poverty all while allowing those in more affluent countries to benefit. The future is bright (in this regard).

  • Reply 5 of 15
    nunzynunzy Posts: 329member
    All that Apple cares about is total profits. Anything else is just the means to that end.

    And Apple is winning!
    watto_cobra
  • Reply 6 of 15
    MacProMacPro Posts: 17,289member
    Soli said:
    It'll take awhile (perhaps decades) but India will be the new China. Continued globalization will help increase India's GDP, bring jobs to the people, and bring a large portion of their population out of extreme poverty all while allowing those in more affluent countries to benefit. The future is bright (in this regard).

    but ... but ... globalization is bad ...  xenophobia and trade wars are the new way forward ... aren't they?  ;)

    Sorry couldn't resist/smacks head
    Soliwatto_cobra
  • Reply 7 of 15
    avon b7avon b7 Posts: 2,206member
    "Xiaomi has previously indicated that it planned to make virtually no money in phone sales and eventually make money from services targeted at its installed base, but Android buyers have little keeping them attached to any specific vendor, and Xiaomi has yet to produce any impressive results from its services offerings."

    Yes, Xiaomi has stated exactly that. In fact it has publicly stated that it plans to put an indefinite 5% cap on net profits (I'm not sure if that is limited to hardware or its entire business model).

    Clearly, even if it could make more, it wouldn't - but by design.

    https://www.ft.com/content/150e3d34-4875-11e8-8ee8-cae73aab7ccb

    Saying that Apple makes 10x the profits of Xiaomi therefore becomes a very stale comparison.

    They have yet to make any inroads into services because they are just getting started in earnest, so yes, eventually they hope it will be a revenue driver for the future. Although the quote actually gives that information, it is flooded in a sea of Apple positives and spin. And while that strategy may or may not work, Apple is apparently seeing unit sales fall in India while Xiaomi unit sales have surged. If they are to see their plan succeed, at least the base is being created.

    One of the source pieces speaks of the Indian market being polarised by Chinese manufacturers while this piece takes less than one paragraph to plunk this on the table:

    "
    a series of Chinese makers working to flood the emerging nation with cheap smartphones."

    However, the same source article tells us:

    "In the just concluded Jan-March quarter, Apple lost its leadership status in the Rs 30,000-plus segment to Samsung that captured half of the total market with its new launches, as per Counterpoint. One-Plus was in the second place with one-fourth share of the premium market, the researcher said"

    So maybe they are flooding the Indian market with cheap but also 'premium' phones? 'Rs 30,000-plus' is about 400€ as a starting price, so not cheap at all. Yes, the article mentions the part about Apple losing its leadership status with a brief 'Apple was eclipsed by...' which basically puts a brave face on this:

    "
    Apple India’s pace of sales growth, however, came down significantly from 40%-plus it had reported for previous five years since the company increased its focus on India even as the Chinese smartphone brigade started polarising the Indian market."

    And are we talking about feature phones, smartphones or both? It sounds like smartphones but how can smartphones flood a market that still seems dominated by feature phones?

    "As per market research firm Counterpoint Research, India’s overall mobile shipments grew by 37% in the fourth quarter of 2017, with feature phones growing at an ‘astonishing’ 55% in that period. Feature phones essentially have features such as the ability to access the internet, but they lack the advanced functionality of smartphones. While the smartphone shipment grew merely by 12%, feature phones have made an astounding comeback in the Indian market."

    https://www.financialexpress.com/industry/technology/feature-phones-continue-to-ring-loud/1086663/


    Where did the Chinese 'flooding' the Indian market with cheap phones actually come from? The linked article just says 'polarising' and says nothing about 'cheap' either.

    These numbers basically cover Jan-March 2018 and overlap (content-wise) with numerous recent articles here that focus on the impact of iPhone X in one snapshot. A snapshot that is pointed to enthusiastically without truly taking (or making) any attempt to put it into any context beyond the reporting period itself.

    To top matters off, the premium P20 Pro launches in India this very week at Rs. 65,000, adding to the Samsung products already on sale in the premium segment.

    Competition at the high end would appear to be hotting up right now. We will have the world's top three smartphone manufacturers going head to head with their best offerings as well as in the tiers immediately below the top end.

    Beyond India, competition will even be intense virtually everywhere (perhaps with the exception of the US) with BKK and Xiaomi hitting Europe as part of their global plans.


  • Reply 8 of 15
    avon b7 said:
    "Xiaomi has previously indicated that it planned to make virtually no money in phone sales and eventually make money from services targeted at its installed base, but Android buyers have little keeping them attached to any specific vendor, and Xiaomi has yet to produce any impressive results from its services offerings."

    Yes, Xiaomi has stated exactly that. In fact it has publicly stated that it plans to put an indefinite 5% cap on net profits (I'm not sure if that is limited to hardware or its entire business model).

    Clearly, even if it could make more, it wouldn't - but by design.
    Yes certianly Xiaomi can make money but is choosing not to because of a genius design.
    Saying that Apple makes 10x the profits of Xiaomi therefore becomes a very stale comparison.

    They have yet to make any inroads into services because they are just getting started in earnest, so yes, eventually they hope it will be a revenue driver for the future.
    In the last quarter, "Apple posted $8.5 billion in revenue in its services category, up 13 percent year over year. At present, services revenue has grown to about $30 per active device." So you think Xiaomi is choosing not to make money on principle, while Apple is yet to make any progress in Services, when it's generating $8.5B per quarter. That's insane.
    Although the quote actually gives that information, it is flooded in a sea of Apple positives and spin. And while that strategy may or may not work, Apple is apparently seeing unit sales fall in India while Xiaomi unit sales have surged. If they are to see their plan succeed, at least the base is being created.

    Did you notice how Xiaomi "created a base" in China making no money, then fell into fifth place while its customers moved to the next cheap Android maker? When is it "yet" to start monetizing its fleeing "base"?
    One of the source pieces speaks of the Indian market being polarised by Chinese manufacturers while this piece takes less than one paragraph to plunk this on the table:

    "a series of Chinese makers working to flood the emerging nation with cheap smartphones."

    However, the same source article tells us:

    "In the just concluded Jan-March quarter, Apple lost its leadership status in the Rs 30,000-plus segment to Samsung that captured half of the total market with its new launches, as per Counterpoint. One-Plus was in the second place with one-fourth share of the premium market, the researcher said"

    So maybe they are flooding the Indian market with cheap but also 'premium' phones? 'Rs 30,000-plus' is about 400€ as a starting price, so not cheap at all.
    "ASP (Average selling price) of the smartphone has increased from $131 in Q1 2016 to $155 in Q1 2017. And almost 67% of smartphones, sold in India by Chinese vendors, are now available in the price range of $100-$200." China's move into India largely replaced sales from domestic Indian phone producers.

    Meanwhile, Apple's sales have grown by 44% and are fueling Apple's expansion there with real profits. The fact that a minority of Android makers are pushing into the low end of the $400+ market and not making any money at it isn't a serious threat to Apple growing and profiting from the high end of the $400+ segment.
    ronnjony0watto_cobra
  • Reply 9 of 15
    tzeshantzeshan Posts: 1,665member
    avon b7 said:
    "Xiaomi has previously indicated that it planned to make virtually no money in phone sales and eventually make money from services targeted at its installed base, but Android buyers have little keeping them attached to any specific vendor, and Xiaomi has yet to produce any impressive results from its services offerings."

    Yes, Xiaomi has stated exactly that. In fact it has publicly stated that it plans to put an indefinite 5% cap on net profits (I'm not sure if that is limited to hardware or its entire business model).

    Clearly, even if it could make more, it wouldn't - but by design.
    Yes certianly Xiaomi can make money but is choosing not to because of a genius design.
    Saying that Apple makes 10x the profits of Xiaomi therefore becomes a very stale comparison.

    They have yet to make any inroads into services because they are just getting started in earnest, so yes, eventually they hope it will be a revenue driver for the future.
    In the last quarter, "Apple posted $8.5 billion in revenue in its services category, up 13 percent year over year. At present, services revenue has grown to about $30 per active device." So you think Xiaomi is choosing not to make money on principle, while Apple is yet to make any progress in Services, when it's generating $8.5B per quarter. That's insane.
    Although the quote actually gives that information, it is flooded in a sea of Apple positives and spin. And while that strategy may or may not work, Apple is apparently seeing unit sales fall in India while Xiaomi unit sales have surged. If they are to see their plan succeed, at least the base is being created.

    Did you notice how Xiaomi "created a base" in China making no money, then fell into fifth place while its customers moved to the next cheap Android maker? When is it "yet" to start monetizing its fleeing "base"?
    One of the source pieces speaks of the Indian market being polarised by Chinese manufacturers while this piece takes less than one paragraph to plunk this on the table:

    "a series of Chinese makers working to flood the emerging nation with cheap smartphones."

    However, the same source article tells us:

    "In the just concluded Jan-March quarter, Apple lost its leadership status in the Rs 30,000-plus segment to Samsung that captured half of the total market with its new launches, as per Counterpoint. One-Plus was in the second place with one-fourth share of the premium market, the researcher said"

    So maybe they are flooding the Indian market with cheap but also 'premium' phones? 'Rs 30,000-plus' is about 400€ as a starting price, so not cheap at all.
    "ASP (Average selling price) of the smartphone has increased from $131 in Q1 2016 to $155 in Q1 2017. And almost 67% of smartphones, sold in India by Chinese vendors, are now available in the price range of $100-$200." China's move into India largely replaced sales from domestic Indian phone producers.

    Meanwhile, Apple's sales have grown by 44% and are fueling Apple's expansion there with real profits. The fact that a minority of Android makers are pushing into the low end of the $400+ market and not making any money at it isn't a serious threat to Apple growing and profiting from the high end of the $400+ segment.
    Maybe Xiaomi and every other Android smartphone makers have a contract with Google like Apple does that Google will pay the smartphone makers a certain percentage for ads on the phone? Maybe this is the conspiracy designed by Google to entice the companies making Android phones even without profit? Because this revenue will continue for many years as long as the phone is being used. 
  • Reply 10 of 15
    gatorguygatorguy Posts: 18,603member
    avon b7 said:
    "Xiaomi has previously indicated that it planned to make virtually no money in phone sales and eventually make money from services targeted at its installed base, but Android buyers have little keeping them attached to any specific vendor, and Xiaomi has yet to produce any impressive results from its services offerings."

    Yes, Xiaomi has stated exactly that. In fact it has publicly stated that it plans to put an indefinite 5% cap on net profits (I'm not sure if that is limited to hardware or its entire business model).
    The pledge applies only to hardware. Their internet services are reported to be very profitable. Even their press announcement of the 5% net profit limit says that affordable hardware sold at a fair profit is intended to draw buyers into their more profitable services provider segment.
    muthuk_vanalingam
  • Reply 11 of 15
    saltyzipsaltyzip Posts: 145member
    nunzy said:
    All that Apple cares about is total profits. Anything else is just the means to that end.

    And Apple is winning!
    Depends how you define winning, market share with good profits vs being greedy and having exorbitant profit's. Which one is most sustainable long term, that's the challenge. Having a much much larger market, android is the winner surely long term, there is only so much a phone can do for the average Joe.

    There is nothing other than iMessage that warrants a user switching from android to apple, it used to be camera, but android phones like the pixel have surpassed the iPhone. This is why apple services are trying to make unique content to entice people over to the platform, as their hardware advantage has gone. Not sure how successful that approach will be, not very would be my guestimate.




    edited April 30
  • Reply 12 of 15
    tmaytmay Posts: 2,648member
    gatorguy said:
    avon b7 said:
    "Xiaomi has previously indicated that it planned to make virtually no money in phone sales and eventually make money from services targeted at its installed base, but Android buyers have little keeping them attached to any specific vendor, and Xiaomi has yet to produce any impressive results from its services offerings."

    Yes, Xiaomi has stated exactly that. In fact it has publicly stated that it plans to put an indefinite 5% cap on net profits (I'm not sure if that is limited to hardware or its entire business model).
    The pledge applies only to hardware. Their internet services are reported to be very profitable. Even their press announcement of the 5% net profit limit says that affordable hardware sold at a fair profit is intended to draw buyers into their more profitable services provider segment.
    Sounds wonderful, though the reality is that it only codifies an existing near profitless hardware business.

    Diffusion in Android OS/clone handsets will have Huawei, Oppo, Vivo, also adding "very profitable" services, which will compete on service; the new race to the bottom

    Seems like a suicide pact in the making.

    What am I missing?
    watto_cobra
  • Reply 13 of 15
    tmaytmay Posts: 2,648member

    saltyzip said:
    nunzy said:
    All that Apple cares about is total profits. Anything else is just the means to that end.

    And Apple is winning!
    Depends how you define winning, market share with good profits vs being greedy and having exorbitant profit's. Which one is most sustainable long term, that's the challenge. Having a much much larger market, android is the winner surely long term, there is only so much a phone can do for the average Joe.

    There is nothing other than iMessage that warrants a user switching from android to apple, it used to be camera, but android phones like the pixel have surpassed the iPhone. This is why apple services are trying to make unique content to entice people over to the platform, as their hardware advantage has gone. Not sure how successful that approach will be, not very would be my guestimate.




    You obviously define winning as a profitless grab for marketshare, and for the record, the Pixel 2 only sold about 3.9 million units in 2017, so I'm guessing that the Pixel didn't in fact surpass the iPhone in anything except a slightly higher DXOmark.

    https://www.theverge.com/2018/2/13/17007104/google-pixel-total-sales-idc-statistics


    watto_cobra
  • Reply 14 of 15
    foggyhillfoggyhill Posts: 4,663member
    tmay said:
    gatorguy said:
    avon b7 said:
    "Xiaomi has previously indicated that it planned to make virtually no money in phone sales and eventually make money from services targeted at its installed base, but Android buyers have little keeping them attached to any specific vendor, and Xiaomi has yet to produce any impressive results from its services offerings."

    Yes, Xiaomi has stated exactly that. In fact it has publicly stated that it plans to put an indefinite 5% cap on net profits (I'm not sure if that is limited to hardware or its entire business model).
    The pledge applies only to hardware. Their internet services are reported to be very profitable. Even their press announcement of the 5% net profit limit says that affordable hardware sold at a fair profit is intended to draw buyers into their more profitable services provider segment.
    Sounds wonderful, though the reality is that it only codifies an existing near profitless hardware business.

    Diffusion in Android OS/clone handsets will have Huawei, Oppo, Vivo, also adding "very profitable" services, which will compete on service; the new race to the bottom

    Seems like a suicide pact in the making.

    What am I missing?
    Bad service and software, and undifferentiated hardware, so the PC market.... That's working so well for everyone...

    Only the closed off Chinese market sort of protected the Chinese makers initially, but now they're just beating themselves over with terrible crap.
    And yeah, most Chinese software is 90s web site ui horror show and very very bad.
    watto_cobra
  • Reply 15 of 15
    DanielEranDanielEran Posts: 290editor
    tzeshan said:
    Maybe Xiaomi and every other Android smartphone makers have a contract with Google like Apple does that Google will pay the smartphone makers a certain percentage for ads on the phone? Maybe this is the conspiracy designed by Google to entice the companies making Android phones even without profit? Because this revenue will continue for many years as long as the phone is being used. 
    The billions Google pays Apple are income Apple reports. 

    Xiaomi looks significant in China, where it has 5th place market share. But it has no major business elsewhere. Its big play in India is earning low millions. If you think Google is paying Xiaomi anything to direct it customer search queries in a country that Google isn't even available in, you might need to rethink your logic. 

     saltyzip said:
    nunzy said:
    All that Apple cares about is total profits. Anything else is just the means to that end.

    And Apple is winning!
    Depends how you define winning, market share with good profits vs being greedy and having exorbitant profit's. Which one is most sustainable long term, that's the challenge. Having a much much larger market, android is the winner surely long term, there is only so much a phone can do for the average Joe.

    There is nothing other than iMessage that warrants a user switching from android to apple, it used to be camera, but android phones like the pixel have surpassed the iPhone. This is why apple services are trying to make unique content to entice people over to the platform, as their hardware advantage has gone. Not sure how successful that approach will be, not very would be my guestimate.



    The graphic you posted is an IDC fantasy from 2014 of Windows Phone being relevant in 4 years, not real data.
    tmaywatto_cobra
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