What Apple can learn from India
By any reckoning, sales of the iPhone in India have been disappointing if not an outright flop. But the firm can learn lessons that could help future performance both in the United States and overseas.
Apple isn’t confirming any figures, but most reports peg the firm as having shipped 50,000 iPhones to India for its launch in late August, with plans to double that number by the end of 2009. However, most estimates say only 11,000-12,000 have been sold so far.
The simplest explanation is the pricing. The 8GB edition of the phone retails at 31,000 Indian Rupees, which works out today at $631 – far in excess of the $199 US price. That’s so expensive that the local service carriers Vodafone and Airtel have actually set up deals with local banks to offer easy payment plans.
However, the price is not the whole story: the country’s most popular smartphone, the Nokia N96, is actually slightly more expensive but appears to vastly outsell the iPhone. It appears much of the problems have been down to the marketing of the device. Apple has been criticized for doing little local advertising (leaving it down to the network carriers to do the bulk of the work).
The biggest failure has been not explaining why the device is so expensive compared with other countries, particularly given that many potential customers worldwide got the impression from Steve Jobs’ comments (rightly or wrongly) that the $199 price would translate everywhere. That’s simply not possible in India where the phones are sold on a pre-paid (‘pay as you go’) basis, meaning you pay a higher rate for calls but there’s no monthly charge. And if Apple doesn’t take a chunk of the monthly charge, it can’t subsidize the handset price as it does in the US.
There are also other issues involving the way Indians use their phones. Voice calls and text messages still make up the bulk of usage and there’s less appetite for paying a premium (either through data charges or higher purchase prices) for extra features. Throw in the fact that there isn’t a 3G network in India and you can see why many people feel the device isn’t worth the extra cash.
While some of these points are specific to India, Apple needs to learn from the experience. The main difficulty for the firm today seems to be balancing the desire to remain a premium brand (Apple steadfastly refuses to be drawn into price wars in the computer market) while appealing to a broad audience.
With the iPhone now heading to Wal-Mart, the huge potential market of China still untapped, and the economic downturn looking likely to strike worldwide (unlike most localised recessions), Apple may have to compromise its high-end status enough to at least make the iPhone affordable to the average buyer.
A good first step would be the rumoured (but apparently unlikely) cut-price 4GB edition. If Apple really could afford to offer such a phone at half the standard price – even if only in particular international markets – it would be a great way to produce a more affordable product without compromising quality. After all, a 4GB phone will still work perfectly well and would certainly be sufficient for many users’ needs.
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