Apple's iPhone sales up threefold in India as company turns to payment plans
Apple is taking much of what it learned while making inroads into the world's largest cellphone market in China and applying that knowledge to help it crack the vast opportunity present in India, where the company is working with distributors to mitigate the up-front costs of acquiring an iPhone in the country.
Market research firm IDC said late last week that sales of Apple products have risen by 400% over the last three months in India, a region the company has largely 'ignored' for the past several years as it focused on other emerging markets, such China. Much of the recent progress has reportedly come through a boost in iPhone sales, helped by an "extensive advertising and marketing campaign" on the part of the Cupertino-based company.
In followup report Friday, the Economic Times elaborated on the subject, explaining that part of the newfound success has to do with Apple opting for an open distribution model, signing up with distributors Redington and Ingram Micro who then turn around and offer customers more approachable, installment-based payment plans for iPhones.
"Apple understands that installments-based payment is an effective tool for bridging the gap between value and affordability," said Himanshu Chakrawarti, CEO of TheMobileStore, a national retail chain that operates 1,000 outlets in 150 Indian cities. "We started the EMI scheme with Apple early this year and witnessed a three-fold increase in sales."
Payment plans are proving so successful due in part to Apple's previous approach towards marketing the iPhone in India. As AllThingsD points out, Apple has been selling iPhones on the open market, not through carriers that subsidize their cost through high-margin service contracts, which effectively lower their selling price of the handsets for consumers at the point of sale.
The expanded effort is in line with comments made by Apple Chief Executive Tim Cook during a recent conference call with analysts, where he indicated that the company had begun to ramp up efforts in the region but won't be moving as aggressively as it it will be in other emerging markets like China, where he sees greater opportunity in the short term.
?I love India, but I believe that Apple has some higher potential in the intermediate term in some other countries,? Cook said. ?That doesn?t mean that we?re not putting emphasis in India ? we are. We have a business there; that business is growing, but the multilayer distribution there really adds to the cost of getting products to market. So we?re going to continue putting some energies there, but from my own perspective, in the intermediate term there will be larger opportunities outside of there.?
Longer term, India would appear critical to Apples overall growth strategy, as it sits behind China as the world's second largest mobile computing market with demand for mobile phones estimated to reach a quarter billion units by next year.
The move to push payment plans for iPhones in India could serve as short-term a stop-gap measure for Apple, which is heavily rumored to introduce a lower cost iPhone around mid-year that would permanently cater to price-sensitive emerging markets like China and India, where rival Samsung's dominance has gone largely unchecked.
Market research firm IDC said late last week that sales of Apple products have risen by 400% over the last three months in India, a region the company has largely 'ignored' for the past several years as it focused on other emerging markets, such China. Much of the recent progress has reportedly come through a boost in iPhone sales, helped by an "extensive advertising and marketing campaign" on the part of the Cupertino-based company.
In followup report Friday, the Economic Times elaborated on the subject, explaining that part of the newfound success has to do with Apple opting for an open distribution model, signing up with distributors Redington and Ingram Micro who then turn around and offer customers more approachable, installment-based payment plans for iPhones.
"Apple understands that installments-based payment is an effective tool for bridging the gap between value and affordability," said Himanshu Chakrawarti, CEO of TheMobileStore, a national retail chain that operates 1,000 outlets in 150 Indian cities. "We started the EMI scheme with Apple early this year and witnessed a three-fold increase in sales."
Payment plans are proving so successful due in part to Apple's previous approach towards marketing the iPhone in India. As AllThingsD points out, Apple has been selling iPhones on the open market, not through carriers that subsidize their cost through high-margin service contracts, which effectively lower their selling price of the handsets for consumers at the point of sale.
And while India is among the fastest-growing wireless markets in the world, it?s also highly price sensitive. That?s been problematic for Apple, which has traditionally been unwilling to cut prices to drive volume. - AllThingsD"Apple is doing what it did in China three or four years ago. They studied the market, learned consumer needs and suddenly went aggressive," said Jayanth Kolla, founder & partner at Convergence Catalyst, a telecom research firm. "From having about 30 people here six months ago, Apple India is now about 150-people strong."
The expanded effort is in line with comments made by Apple Chief Executive Tim Cook during a recent conference call with analysts, where he indicated that the company had begun to ramp up efforts in the region but won't be moving as aggressively as it it will be in other emerging markets like China, where he sees greater opportunity in the short term.
?I love India, but I believe that Apple has some higher potential in the intermediate term in some other countries,? Cook said. ?That doesn?t mean that we?re not putting emphasis in India ? we are. We have a business there; that business is growing, but the multilayer distribution there really adds to the cost of getting products to market. So we?re going to continue putting some energies there, but from my own perspective, in the intermediate term there will be larger opportunities outside of there.?
Longer term, India would appear critical to Apples overall growth strategy, as it sits behind China as the world's second largest mobile computing market with demand for mobile phones estimated to reach a quarter billion units by next year.
The move to push payment plans for iPhones in India could serve as short-term a stop-gap measure for Apple, which is heavily rumored to introduce a lower cost iPhone around mid-year that would permanently cater to price-sensitive emerging markets like China and India, where rival Samsung's dominance has gone largely unchecked.
Comments
@charlituna
I agree with you there. By the iPhone's next iteration (iPhone 5S or iPhone 6) the iPhone 4S will be the low end model. Damned good phone nonetheless.
I just can't see and hope they never do, dilute the experience with some half a$$ed plasticky thing capable of running half the apps in the App store.
IMO that would signal the beginning of the end for Apple.
Here's a solution.
Take the iPhone 4S. Keep it $0 on contract. Drop it to $299 off-contract, unlocked.
Boom. Cheaper phone. No, it's not the whiny magical "$199" price. Guess what: Apple couldn't care less. This way they still make money on every one, they can still keep up with demand (because they already can't), and everyone shuts up about a cheaper (read: made more cheaply) iPhone.
Quote:
Originally Posted by Tallest Skil
Here's a solution.
Take the iPhone 4S. Keep it $0 on contract. Drop it to $299 off-contract, unlocked.
Boom. Cheaper phone. No, it's not the whiny magical "$199" price. Guess what: Apple couldn't care less. This way they still make money on every one, they can still keep up with demand (because they already can't), and everyone shuts up about a cheaper (read: made more cheaply) iPhone.
Great plan except for one thing. Your $299 off contract iPhone 4S.
If you check over at www.apple.ca you will see that the now 3 year old iPhone 4 is offered at $450 off contract/unlocked. I just can't see them knocking off another $150 of a 2 year old model.
Originally Posted by TheDBA
Great plan except for one thing. Your $299 off contract iPhone 4S.
If you check over at www.apple.ca you will see that the now 3 year old iPhone 4 is offered at $450 off contract/unlocked. I just can't see them knocking off another $150 of a 2 year old model.
Yes, that's why this is a change. The iPhone 4S will be their low end phone this year. The iPhone 4 will stop being made and sold. With the 4S at current 4 prices, the whining continues. Drop the off-contract price of their cheapest phone to a level where they still make a profit on every single one but a larger group can buy it, and they wind up with more money anyway.
Originally Posted by newbee
TS, what makes you think they would "still make a profit on every single one" at 299.00?
I'm of the belief that they wouldn't ever select a price that wouldn't allow them to make a profit on every single one.
I picked $299 for a few reasons:
1) It isn't $199, which I find ludicrous for reasons 2 and 3.
2) It's more than the price for which the whiners clamor, which has generally worked well for Apple
3) Because of 2, demand will be limited to an amount that Apple can provide. The last thing they need is more supply constraints.
I don't know that they would make money on each unit at $299, and so it's obviously speculation for that reason. It just seems like a logical and plausible "bare minimum" price for an off-contract, unlocked iPhone made "cheaper" to sate the demands, real or imagined, of this group of people.
$299 for an iPhone will be a great price. Heck people here would buy it even for $399. Most smartphones' (HTC, Samsung, etc) budget models sell in the $300-400 price range here.
Currently iPhone prices in India:
Entry prices roughly translate to $850, $720 and $495 for iPhones 5,4S and 4 respectively.
Quote:
Originally Posted by spacerays
$299 for an iPhone will be a great price. Heck people here would buy it even for $399. Most smartphones' (HTC, Samsung, etc) budget models sell in the $300-400 price range here.
Currently iPhone prices in India:
Entry prices roughly translate to $850, $720 and $495 for iPhones 5,4S and 4 respectively.
Are these Apple's prices in India, or that of some local ripoff carrier!?
These are ridiculously high prices, and a sure argument for why Apple should directly enter India ASAP, and not waste its time chasing customers who are willing to pay cheap-o prices like $299. Leave those to Samsung.
Apparently payment plans suck until Apple offers them, then they're genius and make perfect sense.
Quote:
Originally Posted by Cash907
And it was only a month ago that Ai'ers were bashing Walmart and straight talk for doing the same thing.
Apparently payment plans suck until Apple offers them, then they're genius and make perfect sense.
Perhaps some did, but not I. Therefore, irrelevant.
Quote:
Originally Posted by anantksundaram
Are these Apple's prices in India, or that of some local ripoff carrier!?
These are ridiculously high prices, and a sure argument for why Apple should directly enter India ASAP, and not waste its time chasing customers who are willing to pay cheap-o prices like $299. Leave those to Samsung.
Haha yeah these are Apple's prices. Airtel just offers iPhones at the same price along with related postpaid plans, like more 3G data. iPhones here are sold unlocked.
While the FDI legislation is warming up in the Parliament, the payment plan is surely building up iPhone sales. Direct Apple sales should bring prices down, as distributors definitely add to the priceline.
Quote:
Originally Posted by anantksundaram
Perhaps some did, but not I. Therefore, irrelevant.
And if the world was made up entirely of you, maybe you'd have a point.
But it's not, therefore, irrelevant.
Putz.
Hi All,
Should point out that all your comments have been directed to US market (except spaceraysand anantksundaram) with concern to low end iPhone. If Apple were to develop a 'low-end' iPhone, it would probably not be sold in US/western/developed countries, but focused on emerging markets. Also Indians do not like being tied to contract and prefer that they can pick and choose their plan, i.e., switch mobile providers when they want at anytime.
Yes Anantksundaram those prices are correct and due to import duty and low volumes, more first than last, why the costs are high.
Good point about India, you can trade in your older iPhone at some retailers for newer model and so the future model, do not cost as much (approx. USD500-600), that's what I did for iPhone 4s to iPhone 5 (32gb)
Soul
Appleinsider: your a little slow, I commented on EMI plans in your previous article with concern to India.
High price? $1080 for the 64GB model isn't that expensive. I paid $1125 here in NL. Italy is expensive though, $1200+
http://store.apple.com/it/browse/home/shop_iphone/family/iphone5
Quote:
Originally Posted by Tallest Skil
Here's a solution.
Take the iPhone 4S. Keep it $0 on contract. Drop it to $299 off-contract, unlocked.
Most Indians find contracts to be a foreign concept. It's a country where the concept of credit is still developing. I haven't met a person yet who bought a phone on contract in India. They usually buy the phone outright (stunning when you think of what high end phones cost there). The strong secondary market also means they can simply sell/trade in their phones every year and refresh at a reasonable cost.
All this isn't great for Apple. The iPhone is uber expensive in India...about the price of a cheap motorcycle...and no I'm not exaggerating. Add to price working against Apple, support is also an issue. There are no Apple stores in India. But if you buy an SIII, there are plenty of places which service them. Apple needs to rectify the support issue and they need the lower priced phone.
I am curious to see how selling old phones as mid-range in India will work out. Indians, by and large are very value conscious. If they perceive that other brands are selling them "newer"phones than the mid-range phones Apple is offering, Apple won't gain as much traction as they think.
Quote:
Originally Posted by PhilBoogie
High price? $1080 for the 64GB model isn't that expensive. I paid $1125 here in NL. Italy is expensive though, $1200+
http://store.apple.com/it/browse/home/shop_iphone/family/iphone5
There's a big difference in what the average Italian middle class worker makes and the average Indian middle class worker. The average Indian middle class family of 4 is surviving on less than $1000 per month.