iPhones have always been an expensive product here in India. It is like that luxury item that everyone covets but only a few own while the rest settles for cheaper alternatives. This should be a matter of concern for Apple because they are unable to tap the massive Indian market.
The brand here struggles against less expensive phones with comparable specs, including local manufacturers like Micromax Informatics, China’s Xiaomi, Oppo Electronics and Gionee Communication Equipment.
In the industry’s fastest growing market, Apple has only been able to make sales of just 3% in the first quarter of this year. So, finally, Tim Cook, the CEO of Apple seems to have paid heed to the concern by saying he wants Indian customers “to be able to buy (iPhones) at a price that looks like the U.S. price.” And now, it appears that potential iPhone users in India can do that at even lower prices.
This is one of the biggest Apple news in India in the recent times. A business professor in India, in fact, bought the iPhone SE in India for just INR 20,400 which is around a $100 less than the similar model that is sold in the US (iPhone SE which is sold at $400 without taxes).
In 2016 Apple shipped 2.6 million devices to India, and the older iPhones accounted for about 55% of those devices. Apart from iPhone 5s, the iPhone 5 and iPhone 6 are some popular options that Indians commonly purchase from retailers and online stores. Retailers offer pitches about cash-back offers, product exchanges, and monthly payment plans on iPhones, “all aimed at making it easier for young Indians to spend a month’s earnings or more on a 5S.”
In recent times sales for Apple devices have drastically dropped in China, and they need another big market to sustain growth and its $800 billion market value. Counterpoint estimates that there will be more than a billion sales of smartphones in the next five years. On May 2nd earnings call Tim Cook said, “We’re very optimistic about our future in this remarkable country, with its huge, young, and tech-savvy population, fast – growing economy, and improving 4G network infrastructure,”.
There is a bar on the importation of electronic devices in India due to the fear of environmental damage and also to establish the country as a manufacturing base. Tim Cook has been lobbying the government to loosen these regulations so that he can sell iPhones in India directly, instead of relying on other retailers.
So, far the government hasn’t retaken a step and is asking Apple to quantify its commitment to India regarding capital and jobs. The research director at Gartner Inc. says, “As the premium segment grows in India, Apple wants a larger slice of it”. He says, “The bigger the iOS base, the brighter Apple’s future in India.”
Apple is also hiring an undisclosed number of “affordability managers” in the country who will negotiate with banks and other lenders on behalf of the potential buyers. According to Ayyappan Rajagopal, the customers from smaller towns have shown exceptional interest in the new reduced prices of iPhones as they rarely buy expensive phones.
He oversees the smartphones sales at the Indian e-commerce leader Flipkart, who sells about a third of the total iPhones in India. He mentions “The older models serve as an entry point”. The iPhone 6 is listed for INR 24,990 on Flipkart and in their last promotional offer on Father’s Day they gave INR 1000 off on a mystery deal.
It would be much easier for the company to reduce prices of iPhones in India if they could manufacture in the country which would allow them to bypass import duties. They have built a rather small factory in Bangalore which is operated by their partner Wistron Corp. They have assembled a couple of thousand iPhone SE as a trial run.
If they were to meet the government requirements of India for local manufacturing, they would start making individual phone components in India. And if that were to happen, the next step would be to open their retail stores.
For now, we can rejoice with this Apple news in India that the tech giant is going to slash prices of their premium devices. They are relying mostly on online retailers like Amazon and Flipkart.
While we wait for the company to start manufacturing in India and open Apple Stores here or the government relaxing the regulations a bit, Indians will certainly jump at the opportunity to own iPhones at lower prices.