Despite an acute shortage of cash and cut in discretionary spending because of demonetisation of Rs500 and Rs1,000 currency notes, iPhone maker Apple was able to post all-time record revenues in India for the quarter that ended December.
Apple chief executive officer Tim Cook, in a call with investors and analysts on Tuesday, said that he saw the Modi government's move to scrap high-value currency as positive in the long term. His comments come on the back of Apple posting its highest-ever quarterly revenue of $78.4 billion in the quarter ended December.
"Despite the demonetisation move in India that created lots of economic pressure, we had all-time record revenue results. Demonetisation has not worked its way through yet. It's still definitely having some overhang. But I think in the longer term, it's a great move," said Cook.
While not quantifying Apple's gains in India, the company has been able to post double digit sales and revenue growth in the country over the past four odd quarters. In October, the company reported that iPhone sales in the country were up 50 per cent in the 12 months that ended September.
On Monday, the Economic Survey showed that demonetisation had impacted the gross domestic product (GDP) growth in the financial year (FY) 2016-17, which dropped to 6.5 per cent from 7.6 per cent in previous FY. However, it also suggested that GDP growth would sharply rebound in the upcoming FY and is expected to be in the range of 6.75-7.5 per cent.
India is the last large open market in the world, with technology companies from across the world flocking here. For Apple, India offers the promise to drive iPhone demand, which is seen as falling in developed markets such as USA and China, in the long term, though high price points will see the company operating in the fringes in the short term.
"We are in discussions on a number of things, including retail stores, and fully intend to invest significantly in the country and believe it's a great place to be," added Cook.
Apple controls less than 3 per cent of India's smartphone market and in order to increase the size of its pie in India, the company is setting up stores and is in talks to locally manufacture its devices. It's small size might suggest that there's plenty of headroom for growth but the company already has the second highest revenues among smartphone vendors in India.
This shows that India continues to remain a market for affordable smartphones with seven out of ten devices sold costing less than Rs10,000. The premium smartphone market, categorised as Rs35,000 and up (where Apple intends to compete), makes up just 4 per cent of the 100 million plus smartphones sold in the country during 2016.
While the iPhone continues to drive majority of Apple's sales in India (similar to other markets), the company said sales of its iPad and Mac computers too saw double digit growth during the quarter ended December. This indicates that a growing number of iPhone users in the country are also buying into other parts of Apple's ecosystem.