Apple Hasn’t Dented India’s Smartphone Market. That Could Change With the iPhone SE. – Barron's

Apple iPhone SE.

Courtesy Apple

While you’re waiting for the launch later this year for the first 5G Apple iPhones, you might want to spare a few minutes to think about the humble iPhone SE, at the bottom end of the company’s smartphone product line. Apple unveiled a second-generation SE in April with a modest price tag—it starts at $399—and impressive specs, including the same processor used in the pricier iPhone 11.

The new phone has picked up some stellar reviews. But more important, it might allow Apple (ticker: AAPL) to attract a new set of customers.

In a research note Thursday, J.P. Morgan analyst Samik Chatterjee asserts that the new version of the SE is positioned to expand the company’s market share in emerging markets—and India in particular. He notes that Apple has struggled mightily in India, where it had just 1% of the smartphone market in 2019.

The market is dominated by the China-based handset companies Xiaomi (1810.Hong Kong), Vivo, and Oppo, plus Samsung Electronics (005930.Korea). It is no coincidence that Apple’s average selling price is more than five times higher than Xiaomi’s.

But Chatterjee thinks Apple can become a more significant player in the India market from here, and the reason for that is the debut of the new iPhone SE.

“The primary driver of our increased optimism relative to growth in India is a clear change in the positioning of the iPhone line-up to address a wider range of price points relative to a few years ago when Apple was highly focused on iPhone revenue growth through price increases,” the analyst writes. “The recent launch of the iPhone SE with a price point of $399 will directly attack Samsung’s market share of 21% in India.”

Apple can take considerable share in mid-to-high-end devices, providing Apple with an estimated $7 billion incremental revenue opportunity., he contends.

“Although we acknowledge the challenges in the near-term following the tough consumer sentiment stemming from Covid-19, we see the India market being positioned as one of the key markets in the long run,” Chatterjee writes.

He sees a big enough opportunity in India for Apple that he raised his target price on the stock to $365 from $350. He maintains his Overweight rating on the shares.

On Thursday, Apple was flat, closing at $318.25. The S&P 500 was down 0.2%.

Write to Eric J. Savitz at eric.savitz@barrons.com

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