Apple has launched its new iPhones for 2018 in the form of the iPhone XR, the iPhone XS and the iPhone XS Max. Pricing for the phones start from Rs 76,900 and go all the way up to Rs 1,44,900.
In the build-up to the iPhone launches, there were speculations about Apple planning to launch an affordable iPhone. Well, the most 'affordable' among the new iPhones is the iPhone XR which starts at Rs 76,900. That is in no way an affordable starting price point, for most consumers anyway. But, for someone upgrading from an iPhone 6/7 to the iPhone XR, the asking price might still be palatable.
Yes, it is a fact that Apple has not really been seeing stellar sales numbers over the last couple of years. Towards the end of last year, Apple had seen only a 17 percent revenue growth, its lowest in 6 years. The last financial year wasn't too fruitful either, leading to the exit of three executives. According to a Counterpoint Research report, Apple managed to sell around 3.2 million units in 2017 and is estimated to sell 2.4 million units in 2018. That's a significant drop in sales volumes.
The duties on smartphones which are imported have gone up to 20 percent, which caused Apple to raise the prices of the iPhone X and every other iPhone selling in India, other than iPhone SE (which was being made in India). These same duties will also mean that the iPhone XS, XS Max and XR will be selling at a much higher premium than what a direct US dollar conversion would work out to. In fact, the iPhone XS Max with the 512 GB storage would be selling for a whopping Rs 40,000+ premium.
According to Counterpoint Research analyst Tarun Pathak, Apple now has a broader smartphone portfolio on offer in the Indian market, from iPhone 6 to iPhone XS Max. Pathak feels that there will be an uptick in the Apple sales numbers, which will be driven by older iPhones.
"These older generation iPhones capture somewhere between half to 2/3rd of the total sales depending on the quarter of the year you look at. So as customs duties make new iPhones one of the costliest in the world, Apple can go for a steep price cut of older generation iPhones to draw sales in India. iPhone 7 can be the new iPhone 6 for Apple in India," said Pathak.
This makes sense considering that Apple has just about started making the iPhone 6s at its Indian plant, in addition to the iPhone SE. It's evident that the high-end iPhone manufacturing is not going to happen in India anytime soon. Apple and the government have yet to reach a consensus regarding the exceptions regarding importing parts as opposed to using locally made parts.
According to IDC associate research director Navkendar Singh, the pricing is intentional. "Apple is not chasing volumes in India, but value, and it will continue with that strategy. So keeping that in mind, pricing isn't a problem for an Apple consumer," said Singh.
The argument that Apple can't sell more premium phones in India because they are not dual SIM devices is also something that Singh disagrees with. "People don't buy Apple devices because of the high cost. But someone who is looking to upgrade from the iPhone 6/6s, will consider the new iPhones," said Singh.
With the Apple iPhone XS starting at Rs 99,900 for the 64 GB variant, how high a price is the Apple customer willing to pay?
"Hardcore Apple fans and rich affluent users will be willing to shell out that price since it’s a status symbol for them but then that section of users is small," says Pathak.
The iPhone X which crossed the Rs 1 lakh barrier last year, didn't really sell in volumes here. In all likelihood, it's safe to say that the story will repeat for the new iPhones, especially XS or XS Max, unless Apple really comes out with aggressive pricing or EMI plans from launch day itself.
On being asked if we will see heavy discounts in the form of cashback offers or festival discounts, Singh said that would most likely not be the case as Apple now has a stronger control over its channel partners.
"Apple sales volumes saw a rise towards the end of 2016 as there were huge discounts being offered by third-party sellers. That was a huge problem for Apple's brand as well. But since H2 2017, Apple has been closely managing its channel partners. So deep discounts in the form of cash back offers will not be that common now. They will drive affordability by tying up with card companies for easy EMI offers," said Singh.
There's also little to fear from the premium Android market as there are many options in the Android space.