Why Mary Meeker’s latest internet trends report is bad news for Apple
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It is the time of the year when Mary Meeker, the voice of internet prognosis, presents her annual findings, as she has been doing since 1995. Her latest report presented at the Code Conference comes with some words of caution that should temper the expectations of internet companies.
True, a growth rate of 9% after the double digit growth years till 2013 may seem worrisome but the sheer base of internet users is now so large that the growth rate shouldn’t matter. After all, is there any product that is used by three billion people worldwide. And the India story in this compendium is still unfolding.
The storm clouds appear to be far more threatening for smartphone makers with growth in users as well as shipments slowing down significantly.
Significantly, the Meeker report provides the real clue to why Tim Cook’s first port of call during his recent India visit was at the Siddhi Vinayak temple in Mumbai. Apple needs divine intervention and never mind which religious hue it comes from. iOS shipments declined 9% year-on-year, its worst showing in the last decade. Indeed, the report suggests that global iPhone shipments may have peaked in 2015. And India may not come to Cook’s rescue too soon.
At $158, India already has among the lowest average smartphone prices in the world, with only Bangladesh among the surveyed countries lower at $123. At the same time, the cost of a smartphone in India, as a percentage of gross national income per capita, is among the highest in the world. What that means is simple – enough Indians can’t and won’t pay Apple-level prices for their smartphones. Even as internet penetration grows in the country, it will be the bottom end of the pyramid which will see further penetration. The low hanging fruit of high net worth individuals with the spending power to buy Apple phones is already taken. Apple’s task is truly cut out.
More bad news for the Cupertino-based company: increasingly, it is an app-driven universe with the average number of apps installed on a device going up to 33 worldwide and the number of apps available to a Android user is way more than those that are available in the iOS microsystem.
But of course, you can’t wish away $233 billion of cash the company has nor its $547 billion valuation (though at $510 billion Google along with Alphabet are now within striking distance). Mary Meeker’s 2017 report should tell us how Apple read this year’s prognosis.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.