Apple is falling into the same trap it did in Australia and other places with pricing where they rip off the public by charging more than they do in the US. This is terrible customer relations as everyone knows and are really offended by it. This is the reason also why everyone outside the US has a US iTunes account.
I believe you should replace "Australia and other places" by "everywhere outside the US". Apple ALWAYS did this, long before the iPhone.
RichL clearly doesn't understand that the market in India is fundamentally different than the U.S.. Foreign companies are not allowed to own stores or sell merchandise directly and must go through (often numerable) second-hand salesmen who all take a cut. I'm sure Apple is selling them at the lowest price they deem reasonable, perhaps even making less (a mark-down) than in other countries.
Check this out: http://www.statista.com/topics/870/iphone/#chapter3 It seems to indicate that Apple's manufacturing price for the iPhone 5 is around $250. I would estimate that the iPhone 4 is about a third of that (correct me if I am wrong -- I could not find the costs). So, import tax or no, apple is protecting its margins before market share. As usual.
1) Your disdain for anyone less fortunate than you is awful.
2) There is nothing wrong with a company adjusting their prices to better compete. Apple has certainly done just that with the iPod because of the 2nd(?) gen Zune.
3) Apple usually doesn't need to lower prices because they already have the lowest equatable price points within each receptive categoruy, save for the iPhone which they have been able to ask higher than their average margins due to the competition being woefully behind in many important areas.
Obviously, in India they can ASK higher than average prices, but the Indians are not answering.
(1) Not at all. We're talking business here, not charity. And it is foolish to try and go after customers who have no money. At some point, you just have to draw a line in the sand.
(2) That depends. Look at Apple's stock price. People keep talking about Apple's shrinking margins. Do you think that those margins will continue to shrink or will they grow if Apple keeps making things cheaper?
(1) is myopic. Poor people (and especially their kids) will not always be poor, and if they grow up with Android phones, that's what they will keep using.
(2) Cheaper products frequently have much higher margins.
Often you will see companies make a larger margin on the lower end of the market than on the high end,
When have you seen this in the phone industry?
A company could find a method to reduce costs thus increasing margins across the board.
Really? As if companies don't have teams of people looking to do this all the time? They are the bean counters and they constantly look to cut costs.
If you can more profit with lower margins they by all means do it.
And if you can't, as Samsung and others can't, then sell higher margin products and be the second largest company in the world with $140 Billion dollars in cash.
"When you have seen this in the phone industry": Apple's margins on the older models (4 and 4S) are higher than on their flagship model. I am pretty sure the margins on the iPad mini are pretty fat, due to much cheaper display.
Since India is mostly pay as you go, why should the carriers subsidize anything?
Why should Apple reduce pricing? You can argue either side, and yes, if that is the standard in India and if Apple wants to compete there (as they seem to want to) then it is Apple that should move, or move the telcos. I further agree that if the U.S. did not subsidize phones, then we also would be buying many more cheap phones, or keeping our iPhones much longer than every 2 years.
Does Apple want to play the race to the bottom in the hopes that the Indians will purchase content to make up the margin loss? I don't know, but I hope not.
"When you have seen this in the phone industry": Apple's margins on the older models (4 and 4S) are higher than on their flagship model. I am pretty sure the margins on the iPad mini are pretty fat, due to much cheaper display.
Depends on what you are stating. If you argue that Apple's older models could be reduced in price to compete, then okay. If you are suggesting a new product of cheaper quality to compete, I disagree. I do so, because with older products you have component savings, R&D is already baked in, and so on. So if the iPhone 4(s) is at 40% and Apple wants to reduce to 30% to compete, sure, win:win for everyone.
My personal opinion is that I don't see Apple introducing a new product with cheaper components in order to compete. Older components such as last years Ax chip, sure. Smaller 2GB SSD, sure. Plastic chase and cheap glass, no.
Depends on what you are stating. If you argue that Apple's older models could be reduced in price to compete, then okay. If you are suggesting a new product of cheaper quality to compete, I disagree. I do so, because with older products you have component savings, R&D is already baked in, and so on. So if the iPhone 4(s) is at 40% and Apple wants to reduce to 30% to compete, sure, win:win for everyone.
My personal opinion is that I don't see Apple introducing a new product with cheaper components in order to compete. Older components such as last years Ax chip, sure. Smaller 2GB SSD, sure. Plastic chase and cheap glass, no.
I am not disagreeing, I am merely saying that the bottom of the line phones (which, in Apple's case, are the older models) are higher margin [for Apple]. This is part of the reason why I cannot understand the talk of cheaper iPhone -- why don't they just sell the older models for cheap, just as they are doing in the US?
Why should Apple reduce pricing? You can argue either side, and yes, if that is the standard in India and if Apple wants to compete there (as they seem to want to) then it is Apple that should move, or move the telcos. I further agree that if the U.S. did not subsidize phones, then we also would be buying many more cheap phones, or keeping our iPhones much longer than every 2 years.
Does Apple want to play the race to the bottom in the hopes that the Indians will purchase content to make up the margin loss? I don't know, but I hope not.
Again, Apple does not have to do anything, but the carrier subsidy only makes sense in the prepaid world, which appears to be much more popular in the US than elsewhere in the world, from what I know.
I am not disagreeing, I am merely saying that the bottom of the line phones (which, in Apple's case, are the older models) are higher margin [for Apple]. This is part of the reason why I cannot understand the talk of cheaper iPhone -- why don't they just sell the older models for cheap, just as they are doing in the US?
Agree 100%. If Apple has enough margin in the 4(s) to reduce price and compete, then I don't see why not in order to sell more content over the long term. They even have the excuse in India (from what I am reading on this thread) as the price is higher due to import tax. If apple would eat that, with say an instant rebate, then they would not have to lower the price worldwide.
Although it looks as though the financing option is working well.
Apple's iPhone has moved into second place in the Indian smartphone market, holding a 15.6 percent revenue share. That's a distant second, though, to Samsung's hold on the market. Offering a wide range of handsets at an array of price points has allowed Samsung to grab 38.8 percent of the revenue in India's growing smartphone market.
Sales are further apart, with Samsung over 33% share vs. Apple under 5%.
Quote:
Since mobile providers in India do not subsidize the cost of smartphones, Apple is faced with a difficult situation in the country. The company's flagship iPhone 5 sells for 45,500 rupees, while Samsung's Galaxy Grand is available for 21,500 rupees.
Again, Apple does not have to do anything, but the carrier subsidy only makes sense in the prepaid world, which appears to be much more popular in the US than elsewhere in the world, from what I know.
I wonder then how does the U.S. telcos make up the money? Data plans? If so, I think I might rather have the higher iPhone cost and cheaper monthly data plan.
I don't have to sound businessy, asI'm not trying to court any customers.[/]On the contrary, Apple should be more selective in choosing potential customers and potential markets to go after.
So where should they go next? Mars? Venus? What potential markets with money are out there that Apple isn't in already? 1/3 of the earth's population lives in India and they're economic status is growing. Not getting a foothold on the ground level cost prove costly for years to come.
I wonder then how does the U.S. telcos make up the money? Data plans? If so, I think I might rather have the higher iPhone cost and cheaper monthly data plan.
Correct, data (and voice, which is insanely overpriced) plans. A friend of mine who is now in Germany pays something like $15 a month for his data (for an iPhone) which is about a factor of three less than the cheapest prepaid plan in the US. Notice that Apple is also getting a kickback on the data plan from the carrier.
Again, Apple does not have to do anything, but the carrier subsidy only makes sense in the prepaid world, which appears to be much more popular in the US than elsewhere in the world, from what I know.
They go prepaid because they can't afford a post paid plan. How can a carrier survive subsidizing such a uncertain customer base?
So where should they go next? Mars? Venus? What potential markets with money are out there that Apple isn't in already? 1/3 of the earth's population lives in India and they're economic status is growing. Not getting a foothold on the ground level cost prove costly for years to come.
Although Apple is trying to find ways to help them finance the phones, how often do you take your company into markets that can't afford your product/service?
Comments
Quote:
Originally Posted by Lerxt
Apple is falling into the same trap it did in Australia and other places with pricing where they rip off the public by charging more than they do in the US. This is terrible customer relations as everyone knows and are really offended by it. This is the reason also why everyone outside the US has a US iTunes account.
I believe you should replace "Australia and other places" by "everywhere outside the US". Apple ALWAYS did this, long before the iPhone.
Quote:
Originally Posted by iObserve
RichL clearly doesn't understand that the market in India is fundamentally different than the U.S.. Foreign companies are not allowed to own stores or sell merchandise directly and must go through (often numerable) second-hand salesmen who all take a cut. I'm sure Apple is selling them at the lowest price they deem reasonable, perhaps even making less (a mark-down) than in other countries.
Check this out: http://www.statista.com/topics/870/iphone/#chapter3 It seems to indicate that Apple's manufacturing price for the iPhone 5 is around $250. I would estimate that the iPhone 4 is about a third of that (correct me if I am wrong -- I could not find the costs). So, import tax or no, apple is protecting its margins before market share. As usual.
Quote:
Originally Posted by Richard Getz
Maybe the people in India need to go to their carriers and complain that they don't subsidize the phone.
Since India is mostly pay as you go, why should the carriers subsidize anything?
Quote:
Originally Posted by SolipsismX
1) Your disdain for anyone less fortunate than you is awful.
2) There is nothing wrong with a company adjusting their prices to better compete. Apple has certainly done just that with the iPod because of the 2nd(?) gen Zune.
3) Apple usually doesn't need to lower prices because they already have the lowest equatable price points within each receptive categoruy, save for the iPhone which they have been able to ask higher than their average margins due to the competition being woefully behind in many important areas.
Obviously, in India they can ASK higher than average prices, but the Indians are not answering.
Quote:
Originally Posted by Apple ][
(1) Not at all. We're talking business here, not charity. And it is foolish to try and go after customers who have no money. At some point, you just have to draw a line in the sand.
(2) That depends. Look at Apple's stock price. People keep talking about Apple's shrinking margins. Do you think that those margins will continue to shrink or will they grow if Apple keeps making things cheaper?
(1) is myopic. Poor people (and especially their kids) will not always be poor, and if they grow up with Android phones, that's what they will keep using.
(2) Cheaper products frequently have much higher margins.
Quote:
Originally Posted by Richard Getz
Often you will see companies make a larger margin on the lower end of the market than on the high end,
When have you seen this in the phone industry?
A company could find a method to reduce costs thus increasing margins across the board.
Really? As if companies don't have teams of people looking to do this all the time? They are the bean counters and they constantly look to cut costs.
If you can more profit with lower margins they by all means do it.
And if you can't, as Samsung and others can't, then sell higher margin products and be the second largest company in the world with $140 Billion dollars in cash.
"When you have seen this in the phone industry": Apple's margins on the older models (4 and 4S) are higher than on their flagship model. I am pretty sure the margins on the iPad mini are pretty fat, due to much cheaper display.
Quote:
Originally Posted by igriv
Since India is mostly pay as you go, why should the carriers subsidize anything?
Why should Apple reduce pricing? You can argue either side, and yes, if that is the standard in India and if Apple wants to compete there (as they seem to want to) then it is Apple that should move, or move the telcos. I further agree that if the U.S. did not subsidize phones, then we also would be buying many more cheap phones, or keeping our iPhones much longer than every 2 years.
Does Apple want to play the race to the bottom in the hopes that the Indians will purchase content to make up the margin loss? I don't know, but I hope not.
Quote:
Originally Posted by igriv
"When you have seen this in the phone industry": Apple's margins on the older models (4 and 4S) are higher than on their flagship model. I am pretty sure the margins on the iPad mini are pretty fat, due to much cheaper display.
Depends on what you are stating. If you argue that Apple's older models could be reduced in price to compete, then okay. If you are suggesting a new product of cheaper quality to compete, I disagree. I do so, because with older products you have component savings, R&D is already baked in, and so on. So if the iPhone 4(s) is at 40% and Apple wants to reduce to 30% to compete, sure, win:win for everyone.
My personal opinion is that I don't see Apple introducing a new product with cheaper components in order to compete. Older components such as last years Ax chip, sure. Smaller 2GB SSD, sure. Plastic chase and cheap glass, no.
I was going to ask the same but he answered them in a later post.
Quote:
Originally Posted by Richard Getz
Depends on what you are stating. If you argue that Apple's older models could be reduced in price to compete, then okay. If you are suggesting a new product of cheaper quality to compete, I disagree. I do so, because with older products you have component savings, R&D is already baked in, and so on. So if the iPhone 4(s) is at 40% and Apple wants to reduce to 30% to compete, sure, win:win for everyone.
My personal opinion is that I don't see Apple introducing a new product with cheaper components in order to compete. Older components such as last years Ax chip, sure. Smaller 2GB SSD, sure. Plastic chase and cheap glass, no.
I am not disagreeing, I am merely saying that the bottom of the line phones (which, in Apple's case, are the older models) are higher margin [for Apple]. This is part of the reason why I cannot understand the talk of cheaper iPhone -- why don't they just sell the older models for cheap, just as they are doing in the US?
Quote:
Originally Posted by Richard Getz
Why should Apple reduce pricing? You can argue either side, and yes, if that is the standard in India and if Apple wants to compete there (as they seem to want to) then it is Apple that should move, or move the telcos. I further agree that if the U.S. did not subsidize phones, then we also would be buying many more cheap phones, or keeping our iPhones much longer than every 2 years.
Does Apple want to play the race to the bottom in the hopes that the Indians will purchase content to make up the margin loss? I don't know, but I hope not.
Again, Apple does not have to do anything, but the carrier subsidy only makes sense in the prepaid world, which appears to be much more popular in the US than elsewhere in the world, from what I know.
Quote:
Originally Posted by igriv
I am not disagreeing, I am merely saying that the bottom of the line phones (which, in Apple's case, are the older models) are higher margin [for Apple]. This is part of the reason why I cannot understand the talk of cheaper iPhone -- why don't they just sell the older models for cheap, just as they are doing in the US?
Agree 100%. If Apple has enough margin in the 4(s) to reduce price and compete, then I don't see why not in order to sell more content over the long term. They even have the excuse in India (from what I am reading on this thread) as the price is higher due to import tax. If apple would eat that, with say an instant rebate, then they would not have to lower the price worldwide.
Although it looks as though the financing option is working well.
Quote:
Originally Posted by AppleInsider
Apple's iPhone has moved into second place in the Indian smartphone market, holding a 15.6 percent revenue share. That's a distant second, though, to Samsung's hold on the market. Offering a wide range of handsets at an array of price points has allowed Samsung to grab 38.8 percent of the revenue in India's growing smartphone market.
Sales are further apart, with Samsung over 33% share vs. Apple under 5%.
Quote:
Since mobile providers in India do not subsidize the cost of smartphones, Apple is faced with a difficult situation in the country. The company's flagship iPhone 5 sells for 45,500 rupees, while Samsung's Galaxy Grand is available for 21,500 rupees.
Samsung just dropped the Grand price in India to 19,500 rupees.
Found a site that calculates import duty and sure enough, it all adds up for the $640 iPhone:
Rs. 34,500 base price + Rs. 11,000 import duty = 45,500 rupees
Working backward, the Samsung Grand must have a base price of Rs. 15,000 ($280) in order to hit Rs. 19,500.
Quote:
Originally Posted by igriv
Again, Apple does not have to do anything, but the carrier subsidy only makes sense in the prepaid world, which appears to be much more popular in the US than elsewhere in the world, from what I know.
I wonder then how does the U.S. telcos make up the money? Data plans? If so, I think I might rather have the higher iPhone cost and cheaper monthly data plan.
Quote:
Originally Posted by KDarling
Sales are further apart, with Samsung over 33% share vs. Apple under 5%.
Samsung just dropped the Grand price in India to 19,500 rupees.
Found a site that calculates import duty and sure enough, it all adds up for the $640 iPhone:
Rs. 34,500 base price + Rs. 11,000 import duty = 45,500 rupees
[chart]
Nice work!
So where should they go next? Mars? Venus? What potential markets with money are out there that Apple isn't in already? 1/3 of the earth's population lives in India and they're economic status is growing. Not getting a foothold on the ground level cost prove costly for years to come.
Quote:
Originally Posted by Richard Getz
I wonder then how does the U.S. telcos make up the money? Data plans? If so, I think I might rather have the higher iPhone cost and cheaper monthly data plan.
Correct, data (and voice, which is insanely overpriced) plans. A friend of mine who is now in Germany pays something like $15 a month for his data (for an iPhone) which is about a factor of three less than the cheapest prepaid plan in the US. Notice that Apple is also getting a kickback on the data plan from the carrier.
They go prepaid because they can't afford a post paid plan. How can a carrier survive subsidizing such a uncertain customer base?
Quote:
Originally Posted by dasanman69
So where should they go next? Mars? Venus? What potential markets with money are out there that Apple isn't in already? 1/3 of the earth's population lives in India and they're economic status is growing. Not getting a foothold on the ground level cost prove costly for years to come.
Although Apple is trying to find ways to help them finance the phones, how often do you take your company into markets that can't afford your product/service?
Quote:
Originally Posted by dasanman69
They go prepaid because they can't afford a post paid plan. How can a carrier survive subsidizing such a uncertain customer base?
It can't, so it doesn't....