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Apple Q1 shipments slide 40% on Covid restrictions, inventory piles up

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Apple saw a sharp decline of 30-40 per cent in shipments to 600,000-700,000 units in the quarter to June, with sales hurt mainly by the disruption in the retail channels owing to Covid-induced restrictions, according to initial market estimates. The iconic smartphone maker had crossed the million mark in sales consecutively for the previous two quarters.

Market trackers said the online channel is stuck with now high inventory of the premium American brand’s devices, leading to sharp discounts and offers being announced on online platforms which are hoping to offload the inventory.

On Monday, Amazon had announced deals, offers and discounts up to Rs 9,000 on iPhone 12 series, iPhone 11 Pro Series, iPad Mini and MacBook Pro during its six-day Apple sales festival.

Market trackers are, however, optimistic that recovery in sales of Apple devices would outperform the broader smartphone market as e-tailers push demand with special price cuts in the pre-festive quarter. Analysts estimate iPhone shipments in 2021 to be four-five million units, up from 3.2 million in 2020.

“Given the sales rally that Apple was seeing for the past nine months since the launch of the very attractive iPhone 12 series, the demand forecasts for the entire year were quite optimistic,” said Prachir Singh, research analyst at Counterpoint Research. “Naturally, the second wave (of Covid-19) has largely impacted the premium segment devices coming from top eight tier-1 cities.”

Apple and Amazon did not comment on ET’s emailed queries.

Although offline retailers say certain models such as 12 Pro and 12 Pro Max, which are not made in India, are out of stock for the past 10 days, the locally manufactured ones are seeing robust supply and demand ever since Covid infections eased and footfall in malls and premium marketplaces started increasing.

“Of course, online players can burn cash and clear out their inventory pile but offline retailers cannot offer any discounts unless there is a push from the brand which is unlikely in case of Apple,” said a Mumbai-based retail chain owner, who did not wish to be identified. “We expect the inventory to clear out over the next one month.”

Counterpoint’s Singh said that since Apple’s contract manufacturers Foxconn and Wistron started expanding their India operations, iPhone imports have sharply fallen in the past six months.

According to research firm Strategy Analytics, despite some hiccups in the April-June quarter, the iconic smartphone maker is bound to more than double its market share to 3.8 per cent in 2021 from 1.9 per cent in 2020, with the next iPhone series coming up coupled with the already popular 11, 12 and SE series.

Apple has been achieving record sales in all product categories for three consecutive quarters. In the January-March period, it was the number one premium brand with a 48 per cent share of the phone market price above Rs 30,000 and 207 per cent year-on-year growth, according to Counterpoint Research.

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