Where in the world can Apple grow the market for iPhones?

The planet is not yet saturated with smartphones.

Two charts, both from Creative Strategies‘ Ben Bajarin, show as clearly as I’ve seen where the next smartphone wars will be fought.

The first is part of a slide deck Bajarin presented last week in New York City at an Airshow conference hosted by Asymco‘s Horace Dediu. It shows, country by country, what percentage of the population does not yet own a smartphone. You may need to click once or twice on the graphic to read it clearly.

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Click to enlarge.

In the lower left hand corner is the U.S., the very model of smartphone saturation, where less than 20% of the population doesn’t own one. In the top right corner are Indonesia and India, two very large countries where 80% of the population carry dumb phones or no cellphones at all.

The second chart shows even more clearly the scale of the opportunity for Apple and the rest of the smartphone makers.

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Click to enlarge.

Here India and Africa stand out.

Tim Cook doesn’t talk much about Africa. But at the last conference call with analysts, he couldn’t stop talking about India:

“In India, India is also incredibly exciting. India’s growth, as you know, is very good. It’s quickly becoming the fastest growing BRIC country. It’s the third largest smartphone market in the world, behind China and the United States.

“The population of India is incredibly young. The median age there is 27. I think of the China age being young, at 36, 37 and so 27 is unbelievable. Almost half the people in India are below 25. And so I see the demographics there also being incredibly great for a consumer brand and for people that really want the best products.

“And as you know, we’ve been putting increasingly more energy in India. India revenue for us in Q1 was up 38%. We also had currency issues in India, as everybody else did. Constant currency growth was 48%.

“And so it’s a very rapidly expanding country. And I think the government there is very interested economic reforms and so forth that I think all speak to a really good business environment for the future.” (Transcribed by Seeking Alpha.)

There’s a reason Apple has priced the iPhone SE at $399. Why it’s building a $25 million research center in Hyderabad. And why it will find, I suspect, despite talk of a backlash, a ready market in the subcontinent for pre-owned iPhones.

8 Comments

  1. Robert Paul Leitao said:

    Apple’s decision to create the iPhone SE by using the enclosure of the iPhone 5s and updating the handset to the A9 SOC provides for a lower cost model that can handle the latest apps and make uses of the latest services. From an accounting standpoint margin will remain high on the SE as the company opens new markets for its smartphone products. Among the reasons margin will remain high is because the cost of manufacturing equipment for the SE handset may have been wholly amortized or recognized over what had been the anticipated economic life of the equipment.

    The iPhone SE is more affordable than the current flagship handsets for new market entry while expanding the addressable market for developers and content providers.

    0
    April 10, 2016

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