Analyst says India may generate $40b revenue for Apple in ten years

Apple’s investments in India may pay major dividends as Morgan Stanley analyst, Erik Woodring predicts these may account for as much as 15% of revenue growth and 20% of installed base growth across the next five years. He raised his price target to $220 per share on strength of these predictions.

Not just revenue, but also more customers

As revealed in a note seen by ‘Must, the analyst reckons India will achieve $40 billion of revenue for the company across the next decade and may bring an additional 170 million new users to Apple’s installed base.

Apple has strong prospects in India, he said citing his company’s own internal surveys.

He notes these suggest strong potential for increased iPhone penetration/share gains, an expanding Product and Services ecosystem, and robust prospects for new user acquisition.

What’s important to understand is that India is going through an economic boom, a boom he predicts will drive the number of wealthier households to increase fivefold over the next decade as India becomes the world’s third biggest economy.

That’s also going to drive the nation’s own smartphone market, with Apple set to benefit best from this – particularly as the company sets aggressive new targets for growth there.

“We forecast India’s smartphone market growing 3x over the next decade – to $90B – accounting for 100% of global smartphone growth through 2032,” he wrote, noting contributing factors such as growing electrification and urbanization, and an expanding middle class.

The latter, he argues, could drive 11% annual smartphone growth in India in the next ten years, suggesting the nation may account for over 15% of global smartphone sales by 2032, up from 6% today. He reprised the experience in China, when incomes rose swiftly in 2005 the market for consumer durables and electronics “expanded at a 20% CAGR through 2012.”

What other data do you need?

The company surveyed over 3,000 urban India smartphone owners to get a better understanding for India’s smartphone growth potential. The survey revealed:

• 75% of respondents are somewhat or extremely likely to purchase a smartphone in the next 12 months.
• 96% will buy a new device and are willing to spend 20% more to do so.
• Value for price is the approach of consumers there, which seems to be nurturing a move toward premium phones rather than lower end devices.
• Looking forward, the analysts see an 11% CAGR in India’s smartphone market across the next ten years.

“We believe India can be a ‘rising tides lifts all boats’ market over the next decade, as annual smartphone shipments roughly double, to 270m units, by 2032,” said the analyst.

And users stick with Apple 

“Our survey shows Apple is benefitting from rising iPhone penetration, higher desire to purchase Apple products, the highest customer loyalty/retention (80%+ retention rates vs. 60% for Samsung), strong switching activity from Android brands, growing success with trade-ins and instalment plans supporting premium iPhone mix shift higher, and higher than expected paid Services penetration (70%).

“Our new bottom-up forecast implies India can grow from $6B of revenue today to $40B of total Apple revenue in a decade and add 170M users to Apple’s iPhone installed base. This implies that over the next 5 years, India will account for 15% of Apple’s revenue growth and 20% of its installed base growth.”

Once again, it seems Apple’s adventures in India were well timed.

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