Finimize - 🐥 The Angry Bird gets the worm

What’s Going On Here?

Reports out Monday showed India's set to become very important for Apple.

What Does It Mean?

While Apple isn’t dishing out results until next month, the tech giant already hinted at a possible revenue dip last quarter, as global economies and tech demand shrink. But while some areas sour, India could be poised to keep Apple sweet. That’s down to the rapidly growing middle class, in a country where Apple products have barely made a dent among the 1.4 billion population. See, so far, budget-friendly local brands have stolen the show, and only 4% of the nearly 700 million smartphone users in India sport Apple devices. But things are changing: the firm snatched the top spot for sales of devices over $365 last year, and reports out on Monday suggest that sales in India hit a new high last financial year. If they’re right, then it’s no surprise Apple’s opening its first stores in the country this week.

Why Should I Care?

Zooming in: Upsetting China’s apple cart.

Winning over Indian customers could simplify Apple’s logistics, especially now the company’s ramping up Indian production lines in a bid to ease reliance on China. Reports out last week showed Apple assembled more than $7 billion worth of iPhones in India last fiscal year – tripling production from the year before. That amounts to around 7% of all iPhones, a leap from 1% two years ago. Plus, with wages over 50% lower than China’s, this move could fatten Apple’s profit margins too.

The bigger picture: Apples to oranges.

Apple’s Indian shift dovetails with the government’s plan to rival China as the world’s factory, and the move could entice other Western firms to follow suit. But while the country offers perks – like an ample workforce, a fast-growing economy, and incentives for manufacturers – there’s still a ways to go. Crucially, India’s infrastructure (think roads and ports) still lags well behind China’s, which could be a dealbreaker for many.

What’s Going On Here?

Sega swooped in with an offer to buy Angry Birds creator Rovio Entertainment on Monday.

What Does It Mean?

Finland’s Rovio Entertainment soared to the public markets in 2017, riding the tailwinds of Angry Birds – the first mobile game to reach a billion downloads. But that initial hype crash-landed when financial disclosures left investors ruffled, and Rovio’s value took a nosedive it’s never really recovered from. That’s probably one reason that recent months have seen the company fielding buyout offers from a flock of interested parties. And now shareholders seem to have found a satisfactory nest egg: Japanese video game maker Sega flew in with a proposal to acquire Rovio in a nearly $800 million deal – over 60% more than it was worth before rumors of other offers started swirling. And with Sega’s traditional arcade machine business dwindling, doubling down on console and mobile gaming could make sense.

Why Should I Care?

Zooming in: Sega’s feathering its nest.

Sega’s already hatching plans to search for global hits in its own back catalog, with big-budget reboots of classics like Crazy Taxi in the works. And with the global gaming market projected to reach $263 billion by 2026, that could be wise. This latest move could add to that revitalisation, too: the mobile gaming sector is poised to grow particularly rapidly – and in three years’ time, it’s tipped to account for as much as 56% of the overall gaming market.

For markets: Lame duck.

Mind you, if Sega’s stock reaction is anything to go by, investors were less than keen on the deal – and that’s understandable. Angry Birds may be a household name, but its best days are probably behind it. To win investors over, then, Sega’s going to have to squeeze every last drop of mobile expertise out of Rovio, making good on promised synergies to prove this bet makes sense.