Sheldon PintoMay 05, 2016 19:38:44 IST
Apple CEO, Tim Cook recently commented that Apple indeed views India as a country with "huge market potential". He also cited India's young population as being the driving factor for the same.
A few days prior, we also knew that Apple is focussed on the Indian market and was simply awaiting the green signal to open up its swank Apple Stores in the country. The same report from the Times of India also brought out one little yet important detail, refurbished iPhones.
At the presentation to the committee, which was set up to help Apple bypass the mandatory sourcing norms, Apple was quizzed about its plans to bring refurbished iPhones to the country. Turns out Apple told the committee that it had no intentions of starting the same anytime soon. So why is Apple suddenly interested in India? Well Tim Cook already gave out an answer to that.
But why was it slyly pretending to not be interested in selling its refurbished smartphones in India, when it had recently tried to set up a factory to rebuild and sell its refurbished iPhones coming from China? Turns out there are multiple reasons for this.
Apple's iPhone Upgrade Program
If you look up Apple's online stores for the US, Canada and the UK and every other major market you will notice that Apple already has a robust set up for selling its refurbished iDevices. And as it turns out, there's no refurbished iPhones, getting sold anywhere in there. You can get everything from MacBooks, to iPads and iPods and even accessories, but no iPhones.
The reasons for the same can also be attributed to the Apple's renewed iPhone Upgrade Program that lets customers abroad move to a new iPhone every year. It is good for the Apple customers who get a shiny new smartphone every year, but where do those old iPhones go? Well one things for sure, Liam is certainly not a part of this. Not yet.
So with so many iPhones at hand, it indeed makes sense to sell them off than to take them apart bit by bit (which is also expensive, which is why we have Liam). Also with Apple's iPhone Upgrade Program just rolled out, Apple would also need to have a strategy in place one that would make plenty of sense, and be profitable to an extent.
Turns out India would have been one of those markets. You have got a young technology-savvy crowd and while they all crave iPhones, getting one (thanks to the heavy tax) becomes a difficult affair indeed (EMI schemes can only do so much). Clearly, it would have been the perfect opportunity for Apple to sell plenty of lower-priced iPhones in a market that loves the product and has recently started to show plenty of promise wouldn't it?
India as a market to drive volumes
Well its not just us. But market analysts also feel that India rejecting Apple’s request to import and sell used iPhones in the country is a big deal to Apple.
Tarun Pathak, Senior Analyst with Counterpoint Research told Firstpost, "Definitely it’s a major blow to Apple in India. Apple is looking at India as a market which has potential to drive volumes for the Cupertino giant in future and hence taking steps to ramp up its operations. But unlike USA and China, India has been a highly price-conscious market with almost 70% of the smartphone sales being below $150."
He added, "As a result, Apple’s higher priced iPhone portfolio has limited Apple’s opportunity to grow at the same pace as the market. In such a scenario rejection to refurbished imports means Apple’s presence in mid smartphone segment will be limited or next to zero when iPhone 5s undergoes end of life in the coming months. They have to discount iPhone 6 and SE to almost 40% to remain competitive in the mid segment going forward."
Yes, the iPhone 5s will be no more in the coming months, and yes, Apple will bring down the price tags of the iPhone 6 models. This is to keep up sales in a very valuable market, one that is the second largest in the world.
Turns out there could be one more reason for this. Apple's attempt also seemed like a strategy to get more users to first switch to a cheaper iPhone and then upgrade to the new one when the time is right. These would be customers who would normally not give in to spending on a premium priced iPhone but would not mind trying one out.
It's all about brand value
Apple knows that its brand value is important as Vishal Tripathi Research Director, Gartner explains, "The move is pre-dominantly for brand awareness and the company doesn't see any profit in this move. However, if rejected, it will hurt in a big way. The company is looking to get more people to use its devices and make prospective buyers, who will automatically upgrade to an expensive iPhone later. It is not looking for immediate revenue."
Dig a little deeper and you will realise that retailers in the past have tried to sell refurbished iPhones. Back in 2011, the iPhone 3GS was the first one to go out at nearly half its price tag. Next up was the iPhone 4. Turns out this was not Apple, but a distributor who managed to get in a limited number of units up for sale. With the iPhone 5s being phased out, and the iPhone SE taking up its place, Apple will really have to pull down the price tags of its iPhone 6 models to survive the onslaught. Add to this a disappointing quarterly earnings and you can tell that selling refurbished iPhones in India would have been a big deal.
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