AAPL Stock: The Next Billion Dollar Opportunity For Apple Inc

India is the fastest growing major economy in the world, and according to Counter Point Research, it recently overtook the United States as the world's second largest smartphone market after China. In 2016, the smartphone market in India grew by 16% compared to 3% growth worldwide. Apple has recently seen some progress in the country. India has been one of the fastest-growing markets for Apple. According to Counter Point Research, Apple sold a record 2.3 million iPhones in India in 2016, up 39% from the previous year. Of the total, one-third of the total units were sold in the last quarter pushing Apple close to its first 'million units sold' quarter in India.

But despite the recent growth in sales, India still contributes barely 1% of Apple's global iPhone sales. Apple occupies the tenth spot in the list of largest smartphone makers by market size in the country. However, Apple has over 60% market share in the premium segment (above $450). This strong market share in premium segment suggests that many consumers with high disposable income will prefer iPhone over its competitors. Also, smartphone sales in India will continue to grow. Analysts estimate that over the next five years, there will be around 750 million smartphones sold in India. Even if Apple manages to capture a small portion of this, it will give the company a big boost. Apple's case will also be helped by rising disposable income which is expected to double by 2020.

The problem? iPhones are too expensive.

While India represents a huge potential for Apple, there is one big hurdle: pricing. iPhone 7 currently costs around USD 750 in India. For comparison, around 80% of the smartphones sold in India are below $200. The price becomes even more expensive when you consider the fact that India's per capita income (annual) is just around $1750. Such a high price immediately narrows the target market size. For Apple to sell in India, it needs to bring the pricing down. Apple has taken several steps to address the pricing problems.

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Disclosure: Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a ...

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